Cisco Snags Rare Credit Rating Upgrade by S&P

Cisco was raised by S&UP up to “AA-” from “A+” and it has now been removed from CreditWatch with positive implications. The short-term rating remains “A-1+” at S&P. We would point out that the S&P upgrade is based upon one of a criteria change, but this still helps on the surface.

One first issue under the criteria change is the surplus cash adjustment. The rating agency’s stable rating also suggests that Cisco will maintain a supportive financial policy for a minimal financial risk profile.

One other issue that stands out here is that S&P said, “Cisco is likely to expand its shareholder return and acquisition strategies over the intermediate term.” S&P also said that it forecasts continued strong EBITDA and cash flow generation despite challenging market conditions. S&P calls the industry risk as “Moderate” and the country risk as “Low” in the report.

Cisco shares were up 2.35 at $20.72 in late afternoon trading right before the closing bell. Its 52-week range is $19.31 to $26.49. This upgrade may not have caused the rally today, but everyone knows that Cisco needs any bit of good news it can get right now.