JPMorgan is getting more bullish on Cisco Systems stock and predicts solid returns for the networking giant next year.
The firm’s analyst Samik Chatterjee added Cisco (CSCO) to JPMorgan’s Analyst Focus List as a “value idea.” He reiterated his Overweight rating and reaffirmed his December 2019 $59 price forecast for the company’s shares.
“Cisco is now our top pick within our Networking Equipment/IT Hardware coverage given accelerating product momentum, secular transformation to software and recurring revenue, and greater upside from re-rating of the shares,” Chatterjee wrote on Thursday.
Cisco stock is down 1.5% to $46.67 on Thursday, although the shares are up more than 20% this year.
Last month, Cisco reported better-than-expected fiscal-first-quarter results, and gave a financial forecast about in line with consensus. It posted adjusted earnings per share of 75 cents for the October quarter, compared with the Wall Street average estimate of 72 cents, according to FactSet. Sales came in at $13.07 billion, versus the $12.86 billion consensus estimate. For the quarter, Cisco’s Americas revenue rose 5% year-over-year, while revenue in Europe surged 11% and Asia grew 12%.
Chatterjee also noted Cisco’s attractive valuation of 15 times next 12-months price-to-earnings ratio, and predicts continues strong financial results going forward.
“We expect sustained strong top-line momentum combined with modest margin expansion and strong capital allocation framework to provide earnings-related catalysts to investors,” he wrote.
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