Why the market reaction may be an overreaction
- Cisco stock tumbled more than 10% ahead of the open Thursday
- Shares in Juniper Networks and Arista Networks fell after Cisco’s weak outlook
- KeyBanc analysts believe the impact on Cisco’s peers may not be as bad as initially thought
- Arista Networks expects its Enterprise unit to continue growing above the corporate average
- Oppenheimer analysts maintain an Outperform rating on Cisco stock, but advise patience for the integration of Splunk
Cisco stock experienced a significant drop of over 10% before the market opened on Thursday. This decline was in response to the company’s weak outlook, which also affected the stock prices of Juniper Networks and Arista Networks. However, KeyBanc analysts believe that the impact on Cisco’s peers may not be as negative as initially thought. They point out that Cisco is essentially ‘the market’ in certain segments, particularly Enterprise. Arista Networks, for example, expects its Enterprise unit to continue growing above the corporate average. While Cisco stock was hit the hardest, tumbling 11% in premarket trading, Oppenheimer analysts maintain an Outperform rating on the stock. They advise investors to be patient and wait for the integration of Splunk, which Cisco announced a $28 billion deal to acquire in September. Despite lowering their price target, they believe that Cisco has the potential to achieve $4.50 to $5 EPS post Splunk integration, with the stock potentially reaching the mid 70s.
Factuality Level: 7
Factuality Justification: The article provides information about Cisco’s weak outlook and the impact on its peers, as well as analyst opinions. However, it lacks specific details and context about the reasons behind Cisco’s slowdown and the potential implications for the industry.
Noise Level: 3
Noise Justification: The article provides relevant information about Cisco’s weak outlook and its impact on its peers. It includes quotes from analysts and mentions the drop in product orders. However, the article lacks in-depth analysis, evidence, and actionable insights. It also includes filler content about text-to-speech technology and feedback requests.
Financial Relevance: Yes
Financial Markets Impacted: Shares in Cisco’s peers Juniper Networks and Arista Networks
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the impact of Cisco’s weak outlook on its peers Juniper Networks and Arista Networks. While Cisco’s stock tumbled, the analysts believe that the read-across to its peers may not be as negative as initially thought. There is no mention of any extreme event in the article.
Public Companies: Cisco (CSCO), Juniper Networks (JNPR), Arista Networks (ANET), Splunk (SPLK)
Key People: Ciken Wolter (Unknown)
Reported publicly:
www.marketwatch.com 
