PacCrest Upgrades Cisco On Cloud, Fundamentals

In a report published Monday, analysts at Pacific Crest upgraded

to Overweight. The price target was set to $36. The analysts expect the April quarter to be the beginning of a recovery for the company. Although the company's product revenue has declined sequentially for four of the last six quarters, Cisco is expected to start off on a multi-quarter phase of recovery in the April quarter, driven by a number of product cycle tailwinds spanning the routing, switching, wireless and servers segments. According to Pacific Crest, "These segments combined represent about 75% of product sales." The analysts have accordingly raised their revenue growth estimate for the April quarter, while expecting a potentially robust rebound in service provider spending in 2H to positive impact the company going into F2016. "We view cloud momentum around Cisco's Intercloud strategy, based on its 65-plus partners and across 350 data centers in just one year, as a catalyst that could turn cloud from a threat into an opportunity, justifying further multiple expansion," the analysts added. Pacific Crest expects the company's EPS to grow 5-9 percent annually to reach $2.40-$2.50 by 2017.