Why Cisco Systems Topped the Market on Tuesday

Why Cisco Systems Topped the Market on Tuesday

One of the more up-and-down veteran tech stocks of this year, Cisco Systems (NASDAQ: CSCO), had a very pleasant up trading session Tuesday. The networking equipment company’s share price climbed nearly 4% higher on an analyst’s price target bump. That was a solid gain compared to the S&P 500 index, which only managed to inch up by 0.1% on the day.

A small bump thanks to Splunk

Deutsche Bank‘s Matthew Niknam was the person behind the lift. Before market open, he added $1 per share to his Cisco price target for a new tally of $52. That caution reflects his general view of the stock, as he maintained his hold recommendation on it.

In a research note, Niknam wrote that the adjustment was due to changes in his estimates for the company, although it wasn’t immediately clear which estimates, and to what degree he changed them.

This, in turn, followed the recent closing of Cisco’s acquisition of cybersecurity company Splunk. While that deal wasn’t a cheap one — it was an all-cash transaction valued at roughly $28 billion — it did considerably bolster Cisco’s presence in the high-demand cybersecurity segment.

The most recent guidance wasn’t impressive

Cisco has been a roller coaster of a stock particularly since publishing its second-quarter earnings report, in which the company fell notably short on both current-quarter and full fiscal-year guidance (although, to be fair, it beat on trailing quarterly revenue and profitability). Assuming it integrates Splunk effectively, the large new asset should help the one-time networking titan post more encouraging numbers.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems. The Motley Fool has a disclosure policy.

Why Cisco Systems Topped the Market on Tuesday was originally published by The Motley Fool