思科似乎准备好在更强大的终端市场上反弹，Splunk收购：MS

Cisco Systems (NASDAQ:CSCO) appears poised for a rebound in the coming quarters due to a stronger end-market as the networking company integrates its recent acquisition of Splunk, according to Morgan Stanley analysts.

"Cisco is trading at near record discount to S&P despite CIO survey noting healthy growth environment for networking once we get past inventory digestion," said Morgan Stanley equity analyst Meta Marshall in a note. "Given end-market growth, we see Cisco with double-digit overall shareholder return potential, making valuation discount too harsh."

As a result, Morgan Stanley has rated Cisco at Overweight as it resumes coverage. It also assigned a price target of $58 to the stock.

Last month, Cisco completed its $28B acquisition of Splunk, a software company that aids in the organization and analysis of big data, as well as powering cybersecurity operations. 

Morgan Stanley concludes Cisco is probably one or two quarters away from positive estimate revisions.

"However, while the environment remains muted on inventory digestion/macro, our Q1'24 CIO survey published today was increasingly positive on networking growth potential altogether, and particularly for Cisco, making us weary to sit on the sidelines for too long," Marshall notes.

Upcoming catalysts to the stock include Cisco Live in July, fiscal year 2025 guidance in August and the potential for Splunk to outperform.

"On paper, there is a lot that Splunk could do to shore up the observability and security portfolios of Cisco," Marshall said.

"Further, anything that is done to shore up the security portfolio of Cisco likely pulls through multiples of additional spend, given network security is the biggest reason for networking upgrades, creating a path to more meaningful top line growth," Marshall added.

Cisco ticked up 1% during premarket trading Tuesday. It has a Buy rating from Seeking Alpha analysts, but a Hold rating from Wall Street analysts and Seeking Alpha's quant system.