CIBC lowered it rating on Internet gear provider Cisco Systems (CSCO) to hold from buy, citing an increasingly difficult environment. The stock was off 1/4 at 36-1/4.
Analyst Stephen Kamman recommended underweighting Cisco as calendar year 2001 will be a difficult year due to the combination of falling service provider and information technology spending.
Kamman sees a significant risk of a multiple contraction in the sector in the first half of calendar year 2001. He does not think the company is well-positioned to meet changes in the telecom market.
Kamman doubts the company will make its fiscal year 2002 consensus revenue estimates and he believes the company will no longer be able to rely on appreciating stock as currency.
He sees fiscal year 2001 earnings per share of $0.79 and fiscal year 2002 EPS of $0.96.