- Barclays has raised its price target on Cisco Systems (CSCO +1%) ahead of earnings, suggesting that valuation looks at the company might need to evolve the way they have for Microsoft.
- Analyst Mark Moskowitz has an Overweight rating on the stock and bumped his price target to $34 from $31, implying 9% upside from today's closing price.
- "Relative stability in margin and cash flow metrics, alongside being better levered to the cloud, have in part helped rerate Microsoft's valuation metrics," Moskowitz says. "With technology categories converging due to the cloud, we think a similar argument can be made for Cisco's valuation metrics to be the next large-cap tech stock to rerate higher."
- There are still differences, he notes; such a rerating would likely still leave Cisco's P/E gains less than Microsoft's multiple has shown over the past 24 months, as the company is still closer in make-up to IBM than Microsoft.
- Cisco's due to release its fiscal Q4 earnings after the closing bell Wednesday; analysts are expecting (non-GAAP) EPS of $0.60 on revenues of $12.572B.