Morgan Stanley upgrade provided stimulus
As we’ve already seen, Cisco Systems (CSCO) is the top player in the cybersecurity space, poised to benefit from the trend of increased spending on cybersecurity in the wake of the WannaCry attack. Cisco stock received an upgrade to “overweight” from “equal weight” by Morgan Stanley (MS) with a price target of $39.
Morgan Stanley’s upgrade also contributed to the recent upward movement of Cisco stock.
Increased security spending could benefit Cisco
Increased security spending could benefit Cisco, which has a leading position in networking and firewalls. James Faucette, an analyst with Morgan Stanley, commented on what makes Cisco an attractive opportunity in the cybersecurity space: “Cisco continues to drive a mix shift towards software and recurring revenues, and in conjunction with strong firewall refresh activity, will gain share of IT budgets as customers increasingly favor Cisco’s end-to-end portfolio and architecture to improve cybersecurity.”
Citing Faucette’s analysis, Investors.com stated, “Security will increasingly be integrated with IT network functionalities, which we estimate could deliver as much as $17 billion in savings to global enterprises. The security/network combination may improve replacement cycles for Cisco.”
Network security consists of measures adopted to prevent and monitor unauthorized access and the misuse of computer networks. It involves authorization of access to data in a network that’s controlled by a network administrator.
The above graph shows the results of the 2017 annual TechTarget IT (information technology) Priorities survey in which overall network-based security ranked the highest.
Faucette said, “Cisco holds leading share of the firewall market and its end-to-end portfolio is unmatched by peers.” Cisco added more than 6,000 next-generation firewall customers in fiscal 3Q17, bringing its total customer base to 73,000. Its next-generation firewall portfolio grew 49.0% in the past quarter.