Cisco Up On Morgan Stanley Initiation

Cisco CSCO shares are moving up in Wednesday's pre-market after Morgan Stanley initiated the company at overweight. The $30 price target is 22.4 percent above Tuesday’s close.

Analyst James Faucette has huge expectations for Cisco in the upcoming year. Wall Street expects five percent earnings growth, however, Faucette sees 11 percent. A key reason: SDN solution growth.

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Faucette writes, “SDN and NFV concepts aim to improve network administration tools, drive higher levels of automation, and increase hardware flexibility. While still considered ‘proprietary,’ some Cisco customers we have spoken to indicate that their early experience with Cisco's ACI architecture addresses much of the SDN/NFV capability wish list. Further, we believe that the long replacement cycles for networking equipment (typically at least 2x compute replacement cycles) will tend to favor the large scale vendors like Cisco.”

The $30 price target is based on 12 times forward EPS ($2.42).