Cisco Systems' losses highlight rough day for networking stocks
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Cisco Systems (NASDAQ:CSCO) shares fell more than 2% Thursday as J.P. Morgan analyst Samik Chatterjee took down his rating on the networking giant due to what he said was a new "defensive stance" on the sector.
Chatterjee cut his rating on Cisco (CSCO) to neutral from overweight, but said that the company remains "highly relevant" to enterprises and their networking operations. However, Chatterjee said that the company's 2023 fiscal year "will be challenged by both supply and spending hesitations" that will likely result in some softening in terms of Cisco's (CSCO) order growth.
After what has been strong order momentum over the last 18 months, Chatterjee said that a "dynamic" of limited, potentially declining order growth could be on the horizon due to customers taking a breather with their enterprise spending plans.
Chatterjee also lowered his price target on Cisco (CSCO) to $51 a share from $62 and said that "investor sentiment will largely be dictated by order growth relative to long-term revenue growth."
It was turning into a generally down day for networking stocks, as analyst sentiment and broad-base selling ruled Thursday's market action.
Juniper Networks (NYSE:JNPR) shares gave up almost 2% even though Chatterjee raised his rating on the Cisco (CSCO) rival to overweight from neutral. Chatterjee said there is evidence that Juniper (JNPR) is gaining momentum with enterprises with its Mist line of products and services.
Chatterjee said Arista Networks (NYSE:ANET) remains his top pick for networking stocks, as it stands to benefit from growth in capital spending on cloud technologies. However, even Arista's (ANET) shares took a hit and fell 3% on Thursday.
F5 Networks (NASDAQ:FFIV) was also in the red, as its shares dropped by 4% following a rating downgrade from Credit Suisse analyst Sami Badri, who took down his view of the networker to neutral from buy, and cut his price target on F5's (FFIV) stock to $167 a share from $225.