Cisco Gains Ahead Of Q1 Earnings As JPMorgan Projects Networking Market Recovery In 2025

Shares of Cisco Systems Inc. CSCO climbed on Monday, with its rally expected to carry through year-end as the company prepares to announce Q1 earnings on Wednesday.

Despite the company's shares adding 28% since mid-August, versus 10% gains in the S&P 500, the stock has "further headroom for upside in the medium term," according to JPMorgan.

Analyst Samik Chatterjee upgraded the rating for Cisco Systems from Neutral to Overweight, while raising the price target from $55 to $66.

The Cisco Systems Thesis: Expectations of a recovery in the Networking market in 2025 are supported by the recent earnings releases by Juniper Networks, Inc. JNPR and Extreme Networks Inc EXTR, Chatterjee said in the upgrade note.

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Both companies highlighted "encouraging signs" related to customer demand and activity, which suggests that "a Networking recovery is underway," he added.

"Importantly, Cisco being the bellwether of the Networking market should not only benefit from the improving demand signs in the underlying market, but also benefit from better leverage on the recovery given recent workforce reductions through the course of 2024 (~10k employees in total), driving our conviction for the company being well-positioned to drive earnings upside over the next twelve months," the analyst wrote.

The company is now re-focusing on Security, which has expanded from less than 10% of total product revenue to "being on track to account for almost 20% or greater" and is a "positive wild card" that must be watched, he stated.

CSCO Price Action: Shares of Cisco Systems were up 1.4% to $58.95 at the time of publication Monday.

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