|Cisco Stock Is a Top Pick During the Trade War, Analyst Says -- Barrons.com|
11:23 AM ET 5/30/19
|4:15 PM ET 5/31/19|
|Real time quote.|
By Tae Kim
Cisco Systems stock is attractive because it is relatively insulated from the escalating trade conflict between the U.S. and China, according to JPMorgan.
The networking company is a leading maker of routers, switches, and security products.
The back story. Cisco shares (ticker: CSCO) have rallied about 24% so far in 2019. Earlier this month, the company reported strong fiscal third-quarter results above Wall Street expectations.
What's new. JPMorgan analyst Samik Chatterjee on Thursday reaffirmed his Overweight rating for Cisco stock, citing the company's low exposure to China.
"Cisco remains our top pick for investors looking at safe havens in the current environment to navigate through the trade war noise," he wrote. The company has "relatively modest exposure to China and [is] largely immune to any trade-related impacts."
Cisco shares were up 0.5% to $53.45 on Thursday.
The analyst cited the fact that China represents less than 5% of Cisco's sales. He is optimistic about the networking giant's latest product line and its shift to selling more software and subscription offerings.
The company said on its last earning call it expects just a "modest impact" from the worsening trade conflict between the U.S. and China. Cisco also has proactively adjusted its supply chain to lower the impact of any potential tariff increases.
Looking ahead. The analyst reaffirmed his $60 price target for Cisco stock, representing 12% upside to the current stock price.