Cisco Systems Inc. (CSCO) shares soared on Monday, fueled by optimism surrounding the company’s prospects and an analyst upgrade from JPMorgan. The rally is expected to continue through the year-end, with the company set to announce its first-quarter earnings on Wednesday.
Despite already experiencing a significant 28% increase in its share price since mid-August – outperforming the S&P 500’s 10% gain – JPMorgan analyst Samik Chatterjee believes Cisco has further upside potential in the medium term. He upgraded the company’s rating from Neutral to Overweight and raised the price target from $55 to $66.
Chatterjee’s bullish outlook is driven by expectations of a revival in the networking market in 2025. Recent earnings reports from Juniper Networks (JNPR) and Extreme Networks (EXTR) have provided encouraging signs of improving customer demand and activity, suggesting that a networking recovery is underway. This positive trend puts Cisco, the bellwether of the networking market, in a strong position to benefit, according to the analyst.
Cisco’s recent workforce reduction efforts, which saw the company cut approximately 10,000 employees throughout 2024, have further enhanced its ability to leverage the market recovery and drive earnings growth over the next year, Chatterjee noted. This strategic move positions Cisco to capitalize on the improving demand environment.
Beyond its core networking business, Cisco has been making significant strides in its security segment. This sector has grown from less than 10% of total product revenue to a projected 20% or higher, representing a potential wild card that investors should closely monitor, Chatterjee emphasized.
As of Monday’s close, CSCO shares were trading up 1.4% at $58.95, indicating strong investor confidence in the company’s future performance.
