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Analyst: Cisco shares still have room to run

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Cisco shares are at levels not seen since May 2010, up about 36 percent this year versus the S&P 500's increase of about 20 percent, but Jayson Noland, analyst at Robert Baird, believes there’s still room for the stock to climb higher.

Noland said macroeconomic conditions are improving and there is pent up demand across the information technology sector. There are landmark changes taking place across IT, such as innovations in the Cloud, big data and mobility. “Cisco is as well positioned as any of the traditional large-cap vendors to benefit from those trends,” said Noland.

Some of Cisco’s competitors have been aggressive in pricing, but the strategies have been one-dimensional and not too much of a threat, according to Noland.

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The blade server has been a success for Cisco since it entered the market in 2009. The company wriggled its way to becoming the number-two player, between tech giants Hewlett-Packard and IBM. Noland pointed out that Cisco did that through internal innovation. “A lot of large-cap tech companies would rather acquire technology. It’s very difficult to innovate from within. Cisco’s done that quite well,” said Noland.

Cisco will report earnings after the bell Wednesday. Analyst consensus is for a profit of 51 cents per share, even with the same quarter a year ago.

Disclosure: Noland does not own shares of Cisco.

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