Cisco Systems upgraded to buy at BofA on 3 growth drivers

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Cisco Systems upgraded to buy at BofA on 3 growth drivers
Credit: © Reuters.

Bank of America Securities upgraded shares of Cisco Systems (NASDAQ: CSCO ) to Buy from Neutral in a note Monday, raising the stock price target to $60 from $55 per share.

Analysts at the bank highlighted three growth drivers for the company, as well as low expectations and valuation support.

The investment bank believes Splunk, Security and artificial intelligence will offset the networking weakness. "We expect Networking to start normalizing and see renewed growth driven by Cisco's share gains in Ethernet-based AI buildouts of hyperscalers," said analysts.

"We expect Security growth to accelerate with the help of firewall stabilization and recent new product launches," they wrote. "Lastly, we see great growth synergies from Splunk's acquisition."

Analysts acknowledge that the next two quarters may remain pressured, but they believe this weakness is fully reflected in Street expectations, and management guidance is adequately conservative. Overall, there is a favorable setup for CSCO shares, with improved fundamentals set to drive improved growth, according to the bank.

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