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Prudential’s Inder Singh today downgraded Cisco Systems (NASDAQ:CSCO) shares to Neutral from Overweight. “Shares have benefited from a re-acceleration of sales in 2006 amid positive estimate revisions and a rising growth outlook,” Singh wrote in a research note. “However, we believe that while business strength continues, expectations are now much more aligned with likely performance, leaving little room for major upside surprises in ‘07.”

Singh says that he does not expect Cisco’s core markets - switching and routing - to accelerate much from current 15% growth rates - and that in some areas “our bias is for deceleration.”

Singh notes that January quarter results “are likely to be strong” and that the stock could trade up to the $30 level, “so that we may be a bit early with our call,” but adds that “investors should take advantage of any strength as we feel the shares could be range-bound for much of ‘07 until revenues from new initiatives contribute materially.”

CSCO 1-yr chart:

csco chart

Source: Cisco's Core Markets 'No Longer Accelerating'