Cisco could be on a fast track to December lows, analyst warns

Cisco’s shares are crumbling.

Shares of the technology giant fell nearly 16% in August, sharply reversing their broader 2019 uptrend and falling to just under the $47 level by the end of trading on Friday. The action marks Cisco’s worst monthly performance since 2012 and makes the stock the worst performer in the Dow Jones Industrial Average for August.

While Cisco is still up 8% for the year, experts aren’t convinced the pain is over.

“We’re really just stuck in kind of a trading range,” Craig Johnson, senior technical research analyst at Piper Jaffray, said Friday on CNBC’s “Trading Nation.” “From our perspective, this stock looks like it’s probably going to pull back.”

Johnson expects Cisco’s stock to fall to at least the $44 level, which he said would provide “a little short-term support.”

“At worst case, you go back and you retest the lower end of this trading range” between $40 and $60, meaning Cisco could retest its Christmas Eve 2018 lows, the analyst warned.

“We’ve got a little bit more shakeout here to go before we’re really going to step up and put fresh dollars to work,” he said.

For Steve Chiavarone, vice president, portfolio manager and equity strategist at Federated Investors, Cisco didn’t make the list of his top picks in the tech space.

“When you think about the economy, it’s really been this dichotomy between a very strong consumer and … more reticent business spending. Unfortunately, Cisco’s an example of a company that’s kind of caught on the wrong side of that,” he said.

Between slower enterprise spending and the U.S.-China trade dispute, Cisco is suffering, and there are better options to go with in the tech world, Chiavarone said in the same interview.

“Our preference [is] companies that are tied more to the consumer and disruptive technologies,” he said. “We think, in the short run, that’s where the better risk-return is.”

Cisco shares lost nearly 1% in Friday trading.

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