Cisco Systems (CSCO) shares are down 3.0% pre-market after Morgan Stanley downgraded the networking giant to Equal-Weight from Overweight, cutting its price target to $120 from $135 .
Key points from the downgrade:
- Valuation: Stock's 43% gain over 12 months has pushed its valuation to 19x forward earnings, aligning with the S&P 500 and limiting re-rating potential .
- AI Impact: Strong expectations and gross margin headwinds from AI business leave less room for upside, with much AI-driven expansion already priced in .
- Demand & Margins: Concerns over pull-forward demand ahead of price increases and a rising mix of lower-margin hardware to hyperscalers could pressure future results and gross margins .
- Insider Selling: Recent insider selling of ~$6M reinforces limited near-term conviction .
Why is Cisco Systems stock falling today?
INVESTING.COMNov 5, 2:24 PM UTC
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