LOS ANGELES – Shares of networking giant Cisco Systems Inc., which was reporting its fiscal third-quarter earnings later in the day, strengthened Tuesday after brokerage Morgan Stanley upgraded the stock.
Shares of Cisco stood at $20.10 in morning trade on the Nasdaq market, up 85 cents, or more than 4 percent, on strong volume. The stock has traded largely below $20 for the past six weeks, down from a 12-month high of $70.
Morgan Stanley analyst Christopher Stix said he was more confident in Cisco's business, and set a $25 price target for the stock for the next 12 months.
In addition, Alan Loewenstein, assistant portfolio manager of the John Hancock Technology Fund, said Cisco's business on a medium-term horizon looked promising.
``As more and more interest rate cuts occur, spending will increase at the consumer level, which will benefit Cisco's customers,'' Loewenstein said.
He said the stock could be stronger as investors follow conventional wisdom of buying Cisco six to nine months ahead of when business conditions are seen improving.
``We believe the telecommunications revolution is still occurring but we've seen a pause after excess build-up and see spending resuming later in 2001 and 2002,'' he added.
Wall Street analysts have said investors would be most closely watching the company's prognosis on the future, and any hint of a recovery in technology spending, when it posted earnings after the close of trade Tuesday.
Cisco has experienced a sharp slowdown in growth and has had to cut jobs as the overall economy weakened and telecommunications companies, which buy equipment from Cisco, were hit especially hard.