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Cisco Systems, Inc. (CSCO), True Religion Apparel, Inc. (TRLG): Monday’s Top Upgrades & Downgrades

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This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include an upgrade for Cisco Systems, Inc. (NASDAQ:CSCO) and a new buy rating for Skyworks Solutions Inc (NASDAQ:SWKS). Meanwhile, on the “bad news” front…

A downgrade for True Religion
Shareholders of jeans maker True Religion Apparel, Inc. (NASDAQ:TRLG) may be disappointed to learn that their stock got downgraded by a trio of analysts today. Benchmark, B. Riley, and Standpoint Research all cut the stock to neutral — but don’t fret. The reason or the downgrades is actually good news… sort of… for investors: True Religion is getting bought out.

On Friday, private equity firm TowerBrook Capital Partners announced it intends to buy True Religion Apparel, Inc. (NASDAQ:TRLG) for $32 a share. So the analysts’ multiple downgrades are really just evidence that they recognize that after spiking in response to the buyout, True Religion shares really don’t have much room left to run.

Granted, I don’t think TowerBrook is paying enough for True Religion Apparel, Inc. (NASDAQ:TRLG). The buyout price still values the company at lower multiples to both sales and earnings than rivals like PVH Corp (NYSE:PVH) and VF Corp (NYSE:VFC) receive. Still, the analysts appear to be right about this one. Just $0.35 away from its likely buyout price, True Religion’s run is done.

Cisco makes a save
Cisco Systems, Inc. (NASDAQ:CSCO)Speaking of “done,” one analyst says it’s time to stop selling Cisco Systems, Inc. (NASDAQ:CSCO). This morning, FBR Capital removed its “underperform” rating from the Internet equipment maker and upgraded to “market perform.” According to StreetInsider.com, which reported the upgrade today, FBR thinks upstart rivals Nicira, Big Switch, and Embrane, who had been eating into Cisco’s business, are becoming “less disruptive.”

“Pressure on traditional routing and switching could be pushed out a quarter or two” as a result, and indeed, the analyst thinks Cisco Systems, Inc. (NASDAQ:CSCO) may be gaining some sales momentum — even as capital spending levels have “started to moderate.”

Result: Cisco at 12 times earnings and an 8% growth rate — with a 3.2% dividend yield to boot — just might be exactly as cheap as those numbers look. Fact is, FBR may be stopped too far short in its ratings change on Cisco Systems, Inc. (NASDAQ:CSCO). This stock isn’t just too good to short. It might very well be good enough to buy.

Could Skyworks go to the moon?
Last but not least, we come to Skyworks Solutions Inc (NASDAQ:SWKS), the Apple Inc. (NASDAQ:AAPL) iPhone supplier that’s taken some licks as the shine came off investors’ enthusiasm for Apple. Ace analyst Standpoint Research (yes — this is the same gentleman who told you to buy True Religion Apparel, Inc. (NASDAQ:TRLG) before it got bought out, and who declared victory on that pick this morning) thinks the Skyworks selling has gotten overdone, and the stock actually looks attractive to buy now.

I agree.

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