Please ensure Javascript is enabled for purposes of website accessibility

Why Cisco's Stock Popped Today

By Chris Neiger - Mar 5, 2021 at 4:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were happy to see that an analyst upgraded the company's stock.

What happened

Shares of Cisco Systems (CSCO 1.40%) jumped today after a JPMorgan analyst upgraded the company's stock to overweight from neutral. 

The tech stock popped 4.8% on the news and was up 4.4% as of 4:05 p.m. EST.  

So what 

JPMorgan analyst Samik Chatterjee also increased his price target for Cisco's stock to $55 from the previous $50. The upgrade is based on a few things that are working in Cisco's favor, including increased IT spending in the sector, Cisco's transition to subscription revenue, and the company's "inexpensive valuation."  

Ascending arrows on top of a blue bar chart.

Image source: Getty Images.

Chatterjee also believes that Cisco has potential upside for revenue and gross margin expansion in the upcoming quarter. And while Cisco's industry has had to manage a semiconductor shortage right now, as a result of higher demand for chips during the coronavirus pandemic, Chatterjee believes Cisco will be able to manage the shortage better than its peers.

Now what 

Many investors bought up tech stocks when the pandemic began, but Cisco's stock wasn't invited to the party. With today's share price bump, Cisco's shares are up just 12.2% over the past 12 months.

Cisco is still transitioning away from its previous focus on hardware sales to more long-tail revenue from subscription services. And today's optimistic investor note from Chatterjee is definitely welcome news for investors hoping that the tech stalwart can continue its transformation.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$45.62 (1.40%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.