CSCO is one of ten stocks on Morgan Stanley's, "Fresh Money Buy List," expected to outperform the market in the next 3-6 months. Their current price target is $50. Doing a copy/paste from a section of the report:
Our SDN industry call: network investments are converging with cybersecurity decisions. Incorporating software-based networking technologies into cybersecurity
strategies can improve traffic visibility, integrated analytics, and automated security
responses. We call this exponential benefit of combining networking and security SDN, which can meaningfully reduce the cost of security breaches and improve IT operations. Given the relatively small cost of equipment in the overall IT stack (Exhibit 6), we expect the resulting ROI will improve equipment replacement cycles for vendors that can deliver on the visibility, analytics and automation capabilities.
Cisco is best positioned to deliver on SDN: Networking vendors are in a good position to provide key security improvements, but these capabilities require substantial software development, a wide product portfolio/IT footprint and a large partner ecosystem. Cisco is best positioned to meet these requirements: the company has spent~$8bn on acquisitions focused on visibility, analytics and response capabilities, holds the largest market share in ethernet switches and firewalls, and has a partnership with over100 security vendors. Our proprietary CIO Surveys have consistently indicated that Cisco leads other vendors in expected network spend, and is seeing a meaningful benefit from security-related sales.
Catalyst 9K product cycle demonstrating SDN in action. We think the value proposition of combining networking and security technologies, and the resulting improvements in equipment replacement cycles will be most evident in campus networks. The recently launched Catalyst 9K switch is proving to be the fastest ramping product in Cisco's history, and our channel checks suggest that as customers contemplate network upgrades, they are interested in the Cat9K's visibility and automation features as a way into future proof their network investments and reduce operations costs.
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