"We came away from industry interviews in recent weeks with the view that the market has less interest in the Cisco (CSCO +0.1%) product suite than in past transitions," writes Wunderlich's Matthew S. Robinson, downgrading to Hold. "We see the range of alternatives for network automation/software defined networking (SDN), network function virtualization (NFV), and cloud services as dilutive to the Cisco installed base upgrade opportunity."
Robinson also argues there's "more opportunity" in small cap/high-growth names, given their recent selloff. His PT has been lowered by $1 to $24.
Plenty of other analysts have raised SDN-related concerns for Cisco. Some have also brought up NFV, which aims to do for higher-level networking tasks (security, load balancing, etc.) what SDN tries to do for switching/routing (allow proprietary systems to be replaced with commodity hardware).
Cisco recently took another step towards fleshing out its SDN vision by unveiling its OpFlex protocol for interactions between SDN controllers and the hardware they manage. The company argues OpFlex is superior to the widely-embraced OpenFlow on account of supporting a greater level of networking intelligence, and preventing controllers from being a single point of failure.
Much like its ACI/Insieme platform, OpFlex drives home Cisco's efforts to keep customers from adopting rival SDN solutions by pitching an alternative that provides a rich feature set and deep network visibility, but is also linked to Cisco's proprietary hardware.
Shares have turned positive after opening lower.