Sector Watch: Networkers Rise After Morgan Says N. America Stabilizing
By Chris Frankie
Editorial Assistant
5/2/01 12:48 PM ET
Networking stocks, including Cisco (CSCO:Nasdaq - news), were up across the board Wednesday, after a Morgan Stanley Dean Witter analyst indicated that demand for equipment at large North American corporations seems to be stabilizing.
Shares of Cisco jumped 8.4% to $19.30 in recent Nasdaq trading, where it was easily the most active issue. Lucent (LU:NYSE - news) inched up 14 cents, or 1.2%, to $11.03, while Nortel (NT:NYSE - news) was up 90 cents, or 5.8%, to $16.34 on the New York Stock Exchange. Redback Networks (RBAK:Nasdaq - news) leaped $2.70, or 13.9%, to $22.12, while Ciena (CIEN:Nasdaq - news) gained 1.3% to $59.27. Juniper (JNPR:Nasdaq - news) gained 3% to $65.18. Component makers JDS Uniphase (JDSU:Nasdaq - news) and Corning (GLW:NYSE - news) were also stronger. The American Stock Exchange Networking Index rose 4.2%.
According to a research note, which was issued by Morgan Stanley's Christopher Stix, the firm maintained its neutral rating on Cisco, citing its current stock price. "We continue to stay on the sideline on Cisco due to valuation," the firm wrote in the note.
"We do not enjoy continually playing the role of wet blanket on Cisco, but if there is one thing we have learned from the recent pullback in this industry is that regardless of momentum, valuation is paramount at the end," Stix said in the note. He also said the Federal Reserve's rate cuts may help the networker's business, as spending among its customers increases.
Cisco's once-invincible shares are more than 70% off their 52-week high of $71.68. The company, which issued a major profit warning last month, is slated to report its quarterly results Tuesday after the market closes.
ZO(plotka)-I don't want to hear your complaints about this Street.com article.
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