December 21, 1998
Dow Jones Newswires
Networking Stocks Climb On DLJ Cisco Price Target Increase
NEW YORK -- Data-networking stocks advanced in Monday's trading after Donaldson Lufkin & Jenrette analyst Stephen G. Koffler raised his 12-month share-price target on Cisco Systems Inc. (CSCO) to 120 from 80.
In a research note, Koffler said the target increase assumes a multiple of 60 times the investment firm's calendar year 2000 earnings estimate of $2.00 a share.
The analyst said Cisco deserves that price-to-earnings ratio because of its position as a leader in voice and data networks and its role in producing a fundamental building block of the Internet - the router.
"As an Internet stock, Cisco is cheap," Koffler said in the note. "Without Cisco, there is no Internet, yet ... Cisco is valued far below the leading Internet companies."
Koffler said Cisco also offers earnings reliability - something most Internet companies have yet to deliver.
David Powers, an analyst at Edward Jones, said the DLJ news is at least partly behind the networking sector's upswing on Monday.
However, anticipation of better-than-expected earnings from 3Com Inc. (COMS) for its second quarter also is driving optimism in the sector, he added.
"The general sense in the market is that they're going to slightly exceed the estimate," he explained.
A First Call Corp. consensus survey currently puts 3Com's earnings at 31 cents a share for the company's fiscal 1999 second quarter ended November.
Cisco shares recently added 4 5/8, or 5.1%, to 95 1/16, while 3Com stock has climbed 2 1/4, or 5.0%, to 47.
Elsewhere in the networking group, Ascend Communications Inc. (ASND) has risen 3 11/16, or 6.1%, to 63 3/4, Lucent Technologies Inc. (LU) is up 3 15/16, or 4.0%, to 102 5/16 and Newbridge Networks Corp. (NN) has gained 1 3/4, or 7.2% to 28 13/16. |
