Cisco's Stock Gets a Boost From J.P. Morgan Upgrade

By Markets MarketWatch Pulse

Cisco Systems Inc.'s stock jumped 1.2% in afternoon trade Wednesday, after J.P. Morgan analyst Rod Hall said he was no longer bearish, given limited downside risk and an attractive dividend yield. Hall raised his rating to neutral, after being at underweight since Jan. 27, 2014. He bumped up his stock price target to $27.50, which is 1.5% below current levels, from $17. Hall said he believes concerns over the commoditization of Cisco's switching business is already baked into conservative analyst estimates for the current fiscal year, making further cuts less likely. He said the stock's relatively-high annualized dividend yield--3.7% yield vs. the aggregate 2.5% yield of the Dow Jones Industrial Average, according to FactSet--is "compelling" during current uncertain market conditions. "We see this high dependable cash return as a critical supporting factor for the stock in the midst of current market volatility and believe the company has the firepower to further increase should they wish to do so," Hall wrote in a note to clients. The stock has gained 2.8% year to date, while the Dow Jones Industrial Average has tacked on 1.4%.

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