Shares of Cisco Systems Inc. surged on Wednesday following a bullish outlook by J.P. Morgan analyst, Samik Chatterjee. According to Chatterjee, recent data suggests that order trends are finally stabilizing after several consecutive quarters of decline.
In premarket trading, Cisco’s stock (CSCO), climbed by a solid 2.0%, putting it on track to open at its highest level in three and a half months.
In light of the positive developments, Chatterjee upgraded his rating on Cisco’s stock from neutral to overweight. He also increased the price target from $55 to $62.
Although the macroeconomy is expected to continue affecting customer spending negatively, Chatterjee believes that demand and orders for networking equipment – including Wi-Fi, campus switching, and datacenter switching – will not deteriorate further. This anticipated plateau in order moderation should help limit the potential impact on the company.
Furthermore, Chatterjee pointed out that Cisco’s “sluggish investment pace” in business spending will likely be balanced by the support from its elevated backlog, which currently stands at double the normal levels compared to last year.
So far this year, Cisco’s stock has gained an impressive 7.6% (year-to-date), signaling a steady recovery. In comparison, the technology-heavy Nasdaq-100 Index has surged by 44.8%, while the Dow Jones Industrial Average has increased by 5.4%.
With the recent positive outlook and signs of order improvement, Cisco Systems Inc. is poised for a strong rebound in the market. Investors are eagerly anticipating the company’s upcoming performance.