Jim Suva from Citi analyst downgraded Cisco Systems’ shares to Sell From Neutral

CSCO shares now have a price target of $45.00, down from $65.00. Juniper Networks’ (NYSE:) shares have been upgraded from Sell to Neutral with a target price of $36.00 (up $25.00).

“While supply chain constraints are well known, we did not see two new events occurring. The first is a significant increase in police response time (video), and the funding requirements for this are met by increased state and local budgets, inflows of federal stimulus funds and increases in property tax revenue. The second is the increase in defense spending worldwide, particularly for tech defense items, due to the conflict between Russia and Ukraine. We do not believe the investment community has absorbed these new trends,” Suva said in a client note.

Overall, Suva sees Keysight Technologies Motorola Solutions (NYSE) and Motorola (NYSE) were the top-positioned companies for communications equipment to take advantage of this new reality.

An analyst sees Cisco continuing to lose market share. Arista Networks (NYSE:) YoY comps continue to get more difficult.

“As these share shifts evolve, we see a compression in Cisco’s valuation multiple,” the analyst concluded.

Cisco shares are down almost 3% on Tuesday, pre-open.

By Senad Karaahmetovic