(This story is for CNBC Pro subscribers only). Shares of information technology giant Cisco are as cheap relative to the rest of the market as they've been over the past decade and investors should take advantage, Morgan Stanley said in a new client note. The discount between the stock's price-to-earnings ratio relative to that of the S & P 500 is at the biggest in 10 years, the bank said. Morgan Stanley upgraded to the stock to overweight and set a target price of $54 per share, about 18% above where trading closed on Wednesday. Previously, the bank had an equal-weight rating and $46 per share target on Cisco. "We are mindful of secular headwinds and broad macro exposure, but think growing networking / security needs, cash flow flexibility and opex discipline provide tailwinds, helping multiple gap close over" the next 12 months, the bank said. The company is likely unable to be a growth stock, but it should be able to match earnings growth of the broader index, the bank said. "On the bottom line, we think Cisco has cash flow flexibility around share repurchases / acquisitions and opex discipline to continue to have earnings growth track close to the S & P," the note said. The stock gained 1.3% in premarket trading following the upgrade. Shares have lost about 4% for the year and 18% over the past 12 months. Cisco reported revenue decline of 8% year over year for the fiscal third quarter, which ended on April 25. The company said it expected fourth-quarter sales to be down between 8.5% and 11.5% compared with last year.
Cisco's Chairman and CEO Chuck Robbins speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles in Paris on May 24, 2018.