24/7 Wall St.

If there is one company that Wall Street almost always has a hard time getting a solid read on it is Cisco Systems Inc. (NASDAQ: CSCO), and this earnings period was no exception. While many feared that a slowdown in enterprise and carrier network spending would end up being a drag on earnings, the opposite was the case as the networking giant came in with a report that surprised to the upside on the top and bottom lines.

In a new research report RBC has its usual comprehensive look at the companies that are vendors to Cisco. They also chart who would be the biggest benefactors not only from the current quarter’s strength, but from the positive business silos that are benefiting the company going forward from the company product shift to software and recurring revenue.

Three companies look to have benefited, and one is the top pick at RBC in the sector.

Amphenol

This is the top pick in the sector and has remained a favorite at RBC for some time. Amphenol Corp. (NYSE: APH) is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors.

The company has a diversified presence as a leader in high-growth areas of the interconnect market, including: automotive, broadband communications, commercial aerospace, industrial, information technology and data communications, military, mobile devices and mobile networks. RBC notes that the company’s IT/ Data Communication division is 19% of total revenue, and the company does 4% or so of its total business with Cisco.

Shareholders receive a 1% dividend. The RBC price target for the stock is $61, and the Thomson/First Call consensus target is $62. The shares closed Thursday at $55.35.

24/7 Wall St.
Merrill Lynch Raises Price Targets on 3 Top Tech Stocks to Buy