fbpx
QQQ
-1.91
368.39
-0.52%
DIA
-1.32
352.14
-0.38%
SPY
-2.11
442.76
-0.48%
TLT
+ 0.70
148.12
+ 0.47%
GLD
-1.36
172.53
-0.79%

5G Could Help Drive Cisco Systems Recovery, BofA Says In Upgrade

June 16, 2020 12:07 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
5G Could Help Drive Cisco Systems Recovery, BofA Says In Upgrade

Cisco Systems, Inc. (NASDAQ:CSCO) has multiple upcoming product cycles that span more than 35% of its product revenue, according to BofA Securities.

The Cisco Analyst

Tal Liani upgraded Cisco Systems from Neutral to Buy and raised the price target from $48 to $55.

The Cisco Thesis

Cisco’s numbers are likely to bottom out in the fourth quarter, and growth rates may subsequently improve, with easier compares and a cyclical recovery, Liani said in a Tuesday upgrade note. (See his track record here.)

Growth hit a low of negative 7.5% in the third quarter of 2020, and the company is likely to return to a positive growth rate of about 4.4% in the second quarter of 2021, the analyst said. 

Upcoming product cycles could generate accelerated growth, he said. 

“5G could drive better growth in routing reversing multiple years of secular declines; Optical and Ethernet 400G technology could drive data center switching and routing growth; and a WiFi 6 upgrade cycle, new products for cloud titans, and a bolstered optical portfolio that includes 400ZR and pluggables should also drive growth.”

These initiatives could add over $1.5 billion to Cisco’s revenue by 2022, Liani said, adding that he expects the stock valuation to expand once these cycles materialize.

CSCO Price Action

Shares of Cisco Systems were up 2.51% at $46.49 at the time of publication Tuesday.

Related Links: 

'Connecting The Dots': Former Cisco CEO John Chambers Details Lessons In Leadership, Life

Benzinga's Top Upgrades, Downgrades For June 10, 2020

Photo by Helpameout via Wikimedia

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.


Related Articles

Cisco's Security Segment A Bright Spot In Q4, BofA Says After Report Sends Stock Down

While Cisco Systems, Inc. (NASDAQ: CSCO) reported in-line fourth-quarter Wednesday, the tech company's first-quarter guidance reflects a 10% decline in revenue due to weak orders across most verticals and product groups, according to BofA Securities. read more

Should You Buy The Dip In Cisco?

Cisco's Stock Drops On Guidance, Sell-Side Lowers Price Targets

The $2.6B Cisco-Acacia Deal: 2 Analyst Takes On The Optics