Cisco (CSCO) Announces the Launch of Smart Adaptive Network

Cisco Systems Inc. CSCO recently unveiled its new adaptive network that will be able to detect encrypted malware, thus increasing security.

Per the announcement, the network will be constantly evolving and learning while adapting to changes, thus creating an instinctive system that can put a check on cyber attacks before they hit the devices.

"Cisco's Encrypted Traffic Analytics solves a network security challenge previously thought to be unsolvable," said David Goeckeler, senior vice president and general manager of networking and security.

Cisco has been a prominent name in the networking industry. We believe these innovations will definitely provide the company with a first mover's advantage in the networking market.

Notably, the company has underperformed the S&P 500 on a year-to-date basis. While the stock returned 7.2%, the index gained 10.3% over the same time frame.

Opportunities in the Networking Market

In today's connected world, safe networking plays a vital role. After the recent cyber-attack involving ransomeware Wannacry, the demand for security has increased. In such a scenario, Cisco's launch of an automated threat-aware system seems to be perfectly timed.

Cisco's strong foothold in the networking industry is evident from its broad product portfolio that includes Switching, Wireless, Security, Next-Generation Network (NGN) Routing, Collaboration, Data Center and others.

Per Transparency Market Research, the global data center networking market was valued at $63.05 billion in 2016 and is expected to reach $228.40 billion by 2025, expanding at a compound annual growth rate (CAGR) of 15.5%. Another analyst firm IHS mentioned that the Internet of Things (IoT) market will grow from an installed base of 15.4 billion devices in 2015 to 30.7 billion devices in 2020.

Notably, the growth opportunity in the network security market is also rising. Research and Markets estimates that global M2M network security market will witness CAGR of 26.27% during the period 2017-2021.

We believe Cisco is set to take advantage of the increasing demand for secured networking system with its presence across markets. However, stiff competition from Arista Networks ANET, Citrix Systems CTXS and FireEye FEYE remains a headwind.

Zacks Rank

Cisco currently has a Zacks Rank #4 (Sell)

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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