Morgan Stanley downgraded Cisco (CSCO) to equal-weight.
Analyst Alkesh Shah says Cisco is trading in-line with his discount cash flow fair value around $12. Shah thinks the company's first quarter is likely to be soft; weak demand, lower carrier capital expenditures and soft enterprise spending is likely to lead to another leg down in the second half of 2002 and 2003.
Shah also believes that a European summer slowdown is continuing into September, while North American enterprise demand appears flat and Japan weakens. He adds that preliminary Commerce Department data points to 52% quarter over quarter new order declines in September vs. 3% declines in August.
Also, Shah notes 68% of respondents in a CIO survey now expect 2003 network spending to be flat to down. He sees downside support at about $8.