Cisco Systems Upgrade by JPMorgan Chase

Investing.com – Analysts at JPMorgan Chase (NYSE:JPM) have upgraded their rating of Cisco Systems (NASDAQ:CSCO) to "Overweight" from "Neutral," citing the stock's potential for further growth after a 28% rise following its fourth-quarter results in August.

In a note to clients on Monday, the analysts highlighted that Cisco's strong performance, which has outpaced the S&P 500 index, has been fueled by positive investor sentiment regarding demand for networking equipment from business clients.

Cisco, the world's largest networking equipment manufacturer, faced challenges recently due to a demand downturn as clients adjusted their backlogs after a pandemic-related buying spree and supply issues. However, the networking demand environment is beginning to improve and is expected to recover next year from this year's disappointing performance, according to analysts.

The company is set to release its latest results and provide a current-quarter outlook on Nov. 13.

The JPMorgan analysts noted that quarterly returns may remain volatile, particularly during the "early stages of a recovery." They emphasized their focus on "medium-term upsides" resulting from a rebound in the enterprise networking market.

"Industry forecasts remain firm for a strong rebound of +5% growth in aggregate across WLAN as well as DC and Campus Switch (NYSE:SWCH) markets in the 2025 calendar year following a double-digit percentage decline in 2024," stated the analysts led by Samik Chatterjee.

"Additionally, sequential revenue growth in networking revenues from peer companies that have reported to date is leading to our confidence around […] firmly cycling past the trough in relation to spending intent and inventory digestions from customers; [and] […] limited downside to estimates despite inherent choppiness on a quarterly basis."

Cisco shares rose in early US trading on Monday, showing a gain of over 17% this year.