Cisco Stock at Risk Amid Signs of Softer IT Spending, Analyst Says

Is enterprise-technology spending slowing down?

In a cautious research note Tuesday morning on network equipment giant Cisco Systems , Nomura analyst Jeffrey Kvaal raises that question, citing a series of clues that have emerged in the latest round of tech-sector earnings reports.

“Multiple data points emerging over the last several weeks have pointed to the looming risk of a macro slowdown, which would be a headwind to Cisco’s top line and earnings,” Kvaal writes. “During its last call, [Cisco] noted the resiliency of the global economy. More recent datapoints imply resilient may be too positive a descriptor for the current state of affairs.”

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He noted that Cisco (ticker: CSCO) competitor F5 Networks (FFIV) said on its June-quarter earnings call that the overall macro environment is less healthy that it was a year ago and that the company has seen multiple deals delayed or canceled. On that call, CEO François Locoh-Donou said that his company is seeing “specific areas of softness,” particularly in the United Kingdom and Germany.

AT&T (T), Kvaal adds, “cited softer business conditions and pull-ins of investments in light of the China trade uncertainty, even in spite of clearer visibility into a resolution over the last month.”

Arrow Electronics (ARW), a major electronics distributor, recently cut guidance, citing deteriorating demand in its global components business across all products and regions.