Cisco Stock Slumps on Downgrade to Sell. It’s Facing Tough Competition From Arista and Juniper.
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Shares of Cisco Systems were falling Tuesday after the networking hardware and software giant was downgraded to a Sell by Citi.
Analyst Jim Suva cut his rating to a Sell from Neutral, saying in a research note that “current supply chain challenges are more of a headwind for Cisco (ticker: CSCO
) than for the company’s peers.”
In Suva’s view, Cisco’s competitors, such as Arista ( ANET
) and Juniper ( JNPR
), have been more effective at procuring necessary parts than Cisco, which is hurting the company’s sales and market share. In the same research note, Suva upgraded his rating for Juniper to Neutral from Sell, and maintained Arista’s Buy rating.
Although he didn’t change his revenue or earnings estimates for Cisco, he slashed his price target to $45 from $65.
“We emphasize that there are no financial cash flow or going concern issues with Cisco; we simply believe that the stock will trade lower due to valuation multiple compression with inventory issues and share losses,” he wrote.
Analyst sentiment on the stock has been cooling in recent weeks, but few analysts have echoed Suva’s bearish take. Of the 29 analysts covering the stock, 45% rated it a Buy and 52% rated it a Hold, according to FactSet. Only one, or 3.4%, rated it a Sell.
Cisco was down 2.2% to $51.75 in premarket trading on Tuesday. The stock has lost about 16% this year.
Write to Sabrina Escobar at [email protected]
