Cisco Systems Caught In A Cold November Rain

Investors are clearly not happy with Cisco Systems, Inc. (NASDAQ: CSCO) following its second-quarter earnings report based on the stock's 6 percent decline Thursday morning.

In a research report on Thursday, Mark Moskowitz of Barclays maintained an Overweight rating on Cisco's stock with an unchanged $34 price target.

Justification To Stay At Overweight

According to Moskowitz, Wednesday's mixed earnings report coupled with a light outlook for the quarter ahead could disappointing investors but investors should take advantage of the stock's weakness and focus on the long-term picture.

Moskowitz further highlighted the quarter ahead in which Cisco expects revenue to decline 2 percent to 4 percent year-over-year. Moreover, this could signal a potential slowdown for the entire networking and IT hardware sector given Cisco's larger installed base and global reach.

"The silver lining is that we think the main drivers are not due to
the company's execution or being out of position," Moskowitz wrote. "Service provider/carrier and campus spending patterns in routing and switching respectively are contributing to incremental headwinds."

Nevertheless, the analyst believes that Cisco's valuation multiples could move higher as large cap, long-term investors look to invest in companies that could offer stable margin and cash flow stories levered to the cloud beyond the near term.

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