Cisco downgraded at Wells Fargo as firm says shares could be 'range bound'
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Cisco (NASDAQ:CSCO) shares fell on Thursday as Wells Fargo downgraded the networking giant, noting shares could be range bound for some time.
Analyst Aaron Rakers lowered the firm's rating to equal weight, noting that that although the firm is positive on its transition to a subscription model and gaining incremental webscale, shares are likely to stay in a range due to "limited multiple expansion" as investors focus on what could be a peaking backlog and product order growth.
Cisco (CSCO) shares fell slightly more than 2% to $54.63 in mid-day trading on Thursday.
There are also concerns that Cisco (CSCO) may have trouble generating more than 1.5 or 2 percentage points of incremental revenue growth, as its transformation to subscription model is well known and modeled. 
Lastly, even though Cisco (CSCO) is experiencing a "positive ongoing Cat9k upgrade cycle," there are some concerns that it could face increased competition from Arista (NYSE:ANET), HP's (NYSE:HPQ) Intelligent Edge and Juniper Networks (NYSE:JNPR) Mist + EX-series pull-through.
In conjunction, Wells Fargo also upgraded Arista (ANET) to overweight with a $160 price target, noting it has a "more compelling risk / reward setup" than Cisco. In addition, Arista (ANET) looks "well positioned" for a strong hyperscale cloud upgrade cycle and there is the potential for revenue to grow more than expected given its "significant inventory + purchase commitment expansion."
Arista (ANET) shares fell slightly less than 0.5% to $120.10 in premarket trading. 
Last month, Cisco (CSCO) and Rakuten (OTCPK:RKUNY)
agreed on a strategic cooperation deal to build out solutions for 4G and 5G mobile networks based on Open Radio Access Network technology.