Cisco Systems Inc. grew in premarket trading Thursday after a Citi Investment Research analyst upgraded the stock.
Paul Mansky upgraded the stock to "Buy" from "Hold," and raised his price target to $27 per share from $25. He noted that analysts have lowered their expectations for Cisco's fiscal 2008 results, which brought the share price down.
Earlier this month, Cisco said its sales will grow about 10 % in the third quarter, which was below the 15 % analysts projected.
According to Thomson Financial, analysts expect Cisco to earn 36 cents per share in the fiscal third quarter, and $1.54 for the year. A month ago, they expected a profit of 40 cents per share in the third quarter and $1.60 for the full year.
Mansky also believes the recent U.S. economic downturn will have a smaller effect on tech stocks than the 2001-2002 recession did, and that tech stocks will be the first to recover from lower spending.
In the current market, the analyst said he prefers shares of companies that have access to worldwide markets, and have one significant competitor. Those companies include Cisco, Brocade Communications Systems Inc., Emulex Corp., QLogic Corp. and EMC Corp.
Cisco shares added 63 cents, or 2.7 %, to $23.83 in premarket trading.
Cisco Systems, Inc. is a multinational corporation with 63,000 employees and annual revenue of US$35 billion as of 2007. Headquartered in San Jose , California , it designs and sells networking and communications technology and services under five brands, namely Cisco, Linksys, WebEx, IronPort, and Scientific Atlanta. Initially, Cisco manufactured only enterprise multi-protocol routers but gradually diversified its product offering to move into the home user market with the purchase of Linksys while also expanding its offering for corporate customers.