UPDATE: JP Morgan Upgrades Cisco Systems to Overweight

JP Morgan has published a research report on Cisco Systems

and has upgraded the rating from Neutral to Overweight. In the report, JP Morgan writes, "As 2012 kicks off, we are upgrading our rating of Cisco from Neutral to Overweight. After in depth analysis of multiple FY'11 margin drivers, we conclude that switching transition and public sector weakness are each relatively small earnings drivers in isolation. In fact, we believe Cisco encountered a perfect storm of multiple small issues in FY'11 which added up to a material Y/Y decline in gross margin. We do not believe this is likely to repeat in FY'12 as many of these small problems have been addressed in our opinion. In addition, our proprietary analysis of 30 US Federal agency budgets implies that spending will increase in FY'12 after being down in FY'11 and may act as a tailwind for Cisco. As a result, we believe Cisco represents a relatively safe haven for communications equipment investors." JP Morgan has also raised the price target from $19 to $21 on Cisco Systems, which is currently trading up $0.62 from Friday's $18.02 closing price.