Cisco (NASDAQ: CSCO) shares are set to rise due to a big upgrade cycle for its products in the network switch market, according to Nomura Instinet.
The firm raised its rating for Cisco shares to buy from neutral, predicting the company will report higher-than-expected earnings in fiscal 2018.
"We believe Cisco's webscale switching wins are durable and its window for a campus switching refresh will extend through 2019," analyst Jeffrey Kvaal wrote in a note to clients Monday. "Now is the time for networking juggernaut Cisco."
A campus network is a network of local area networks managed by a company or nonprofit institution.
Kvaal raised his price target to $46 from $33 for Cisco shares, representing 16% upside to Friday's close.
The analyst said Cisco increased its market share in the ethernet switch market to 53% in the third-quarter 2017 from 49% the previous quarter. He predicts the switch upgrade cycle will continue through fiscal 2019.
Kvaal predicts Cisco will generate earnings per share of $2.58 in fiscal 2018 versus the Wall Street consensus of $2.46.
Cisco's stock is up 25.5% in the past 12 months through Friday compared with the S&P 500's 13.1% gain.
Cisco, based in San Jose, is the worldwide technology leader that has been making the Internet work since 1984. “Our people, products, and partners,” according to its website, “help society securely connect and seize tomorrow's digital opportunity today.”
The company is slated to report its fiscal second-quarter earnings results on Wednesday.
Its shares were galvanized $1.26, or 3.2%, Monday to $40.82.