Cisco Systems' growth outlook should improve, says a Bank of America analyst who on Monday upgraded the computer networking giant to buy. Cisco stock dipped as the Nasdaq composite also fell.
"We identify three catalysts for growth acceleration," BofA analyst Tal Liani said in a report. "We expect networking to start normalizing and see renewed growth driven by Cisco's share gains in Ethernet-based artificial intelligence buildouts of cloud computing hyperscalers."
Ethernet Networking Upgrades In Data Centers
In July, Cisco joined with Arista Networks, Hewlett Packard Enterprise and other companies to form the Ultra Ethernet Consortium. The group is pushing Ethernet technology for data center upgrades for networking chips that whisk data from computer servers to storage devices. Nvidia is a key competitor.
Liani added: "We expect security growth to accelerate with the help of firewall stabilization and recent new product launches. Lastly, we see great growth synergies from Splunk's acquisition. While the next two quarters may remain pressured, we believe this weakness is fully reflected in Street expectations and management guidance is adequately conservative."
On the stock market today, Cisco stock dipped 0.5% to close at 48.24. Cisco stock has retreated 4% in 2024.
Cisco Stock News: Splunk Acquisition Closes
Further, Cisco recently closed the acquisition of software company Splunk for $28 billion in cash.
Also, Cisco aims to increase recurring revenue from subscription-based software and services and shift away from its core business of selling computer network switches and routers.
Meanwhile, Cisco stock trades near its 50-day moving average.
In addition, Cisco stock owns an IBD Composite Rating of 68 out of a best-possible 99, according to IBD Stock Checkup. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
