Shares of Cisco Systems (CSCO -0.22%) 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.
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."
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.
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.