An RBC Capital Markets analyst cut his price target on Cisco Systems Inc. in a client note Wednesday, saying the network equipment maker expects a recovery in technology spending later than first thought.
Mark Sue lowered his target to $27 from $29. He kept his "Outperform" rating on the San Jose, Calif., company.
The new target implies an expected return of 18 percent on Cisco's closing share price of $22.88 Tuesday.
"Initially, the thought was that the tech spending environment would improve by the second half of this year," Sue wrote in a note to investors. "Instead (Chief Executive John) Chambers is pointing to a more realistic scenario of a first-half 2009 recovery."
Still, Sue said the company appears to be executing well despite the challenging environment. Additionally, better demand from emerging markets appear to be offsetting some weakness in the U.S, he said.
The analyst left his earnings estimates unchanged and predicted the company may stick to its long-term growth guidance of between 12 and 17 percent.
A Cisco representative was not immediately available to comment.
Cisco shares lost 58 cents, or 2.5 percent, at $22.30 in premarket trading after closing at $22.88 on Tuesday.
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