By Senad Karaahmetovic
A Barclays analyst cut Cisco (NASDAQ:) to Equal Weight from Overweight and upgraded Arista Networks (NYSE:) to Overweight from Equal Weight.
On the former, the analyst sees “a more balanced share position going forward” with rivals growing at a faster pace in software. The analyst slashed the price target to $46 from $56.
“We also see CSCO more vulnerable to macro and enterprise risks. Our surveys have shown downticks in spending and, although networking has hung in there, some industry experts see 2023 campus networking revenues declining by 4% in 2023. We also see CSCO market share to remain pressured in key verticals like switching, routing and Wireless LAN, and there is risk as older switches transition to the 9k,” the analyst said in a client note.
As far as ANET is concerned, the analyst believes the company will be able to deliver a strong mid-teens growth rate “for a few more years.”
“We expect market share in the data center switching market to continue to move higher. There are concerns about the Cloud vertical, where we model moderation, but we still expect double digit growth. ANET has successfully diversified its revenues from largest customers MSFT and FB. Its rapid growth in the campus has been impressive, and ANET has just under 2% market share now. We expect more success hare,” the analyst added.
The analyst is also positive on the improvements made in the routing portfolio while the strong exposure to U.S. market makes it less exposed tot FX headwinds.
In this case, the price target remains unchanged at $131.