Morgan Stanley Maintains Overweight on Cisco Systems Following Channel Checks

Morgan Stanley has published a research report on Cisco Systems

that raised estimates following channel checks on the company. In the report, Morgan Stanley wrote, "A full 50% of Cisco partners report business has been above plan the last 3 months, 44% were on plan and just 7% were below plan. Furthermore, resellers report growth expectations in '12 and '13 are higher today than they were 3 months ago. Therefore, we believe improving demand Cisco reported in 2H FQ4 is continuing. Based on our checks U.S. Fed is stronger than seasonal in what is already a seasonally strong quarter, compared to declining order momentum in the last two quarters of (11%) and (8%) y/y order growth. We believe EMEA remains a weak spot, while U.S. momentum could tail-off towards the end of the quarter since our survey only covers 1H FQ1. However, since typical Cisco quarters are back-end loaded, we view a strong start to the quarter as a positive sign." Morgan Stanley maintained its Overweight rating and $22 price target on Cisco Systems, which closed Thursday at $18.80.