Why Did Oppenheimer Upgrade Cisco Systems’ Stock?

By Carrie Williams

Oppenheimer analyst Ittai Kidron upgraded Cisco Systems (NASDAQ: CSCO) to Buy today and set a price target of $36. The company’s shares closed yesterday at $31.85.

Kidron commented:

“Cisco announced a refresh of its campus switch portfolio. The new Catalyst 9000 series of switches are the first new campus switch introduced by Cisco in over a decade (since the Gig/PoE push in early 2000s). We believe this is an important announcement for several reasons: (1) it can trigger an upgrade cycle of Cisco’s campus switch installed base (very old >4 years), (2) it enables the acceleration of its Cisco One Software transition and introduces new subscriptions further accelerating the recurring revenue push, (3) it creates key differentiation in a highly competitive market (vs. HPE/Huawei). With recent sluggish results in this area and above average margin contribution, Cisco has the opportunity to see improved results in this area in 2018.”

According to TipRanks.com, Kidron is a 4-star analyst with an average return of 2.7% and a 52.5% success rate. Kidron covers the Consumer Goods sector, focusing on stocks such as Brocade Communication Systems Inc, Hewlett Packard Enterprise, and Advanced Micro Devices.

Currently, the analyst consensus on Cisco Systems is Moderate Buy and the average price target is $35.62, representing an 11.8% upside.

In a report issued on June 13, Deutsche Bank also reiterated a Buy rating on the stock with a $40 price target.

Based on Cisco Systems’ latest earnings report for the quarter ending April 30, the company posted quarterly revenue of $11.94 billion and quarterly net profit of $2.52 billion. In comparison, last year the company earned revenue of $12 billion and had a net profit of $2.35 billion.

Based on the recent corporate insider activity of 60 insiders, corporate insider sentiment is negative on the stock. Most recently, in March 2017, Prat Bhatt, the SVP, Corp Controller & CAO of CSCO sold 124 shares for a total of $4,249.

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