Shares of Cisco Systems Inc.
are off 1.6% in premarket trading Thursday after Goldman Sachs analyst Rod Hall downgraded the stock to neutral from buy based on his view that enterprise spending will weaken further and that telecom spending will stay “depressed” in the immediate term. “In the telecom segment, we are concerned that negative trends could persist well into 2020, driven by carrier pauses ahead of 5G and needed carrier network automation implementation,” Hall wrote. More generally, Goldman’s recent survey of value-added resellers was “incrementally negative” on trends in enterprise spending. “We believe that most of this weakness relates to a lack of business confidence at large enterprise driven by trade volatility as opposed to a broader macro slowdown,” Hall wrote. He reduced his price target on Cisco shares to $48 from $56 in conjunction with the downgrade. The stock is off 18% over the past three months, while the Dow Jones Industrial Average
has lost 1.9%.