Cisco Systems rose more than 1 percent to its highest level in nearly 17 years on Friday, after an analyst at Bank of America Merrill Lynch upgraded the stock.

Analyst Tal Liani upgraded shares of Cisco to buy from neutral and raised his price target to $46 from $37. The new target is 18 percent above Thursday’s closing price. The stock traded at $39.67 at 10 a.m. in New York.

“The company is in the early stages of a positive transition to software,” Liani said. “While the strategy shift is not new, we believe now is the right time given the added benefit of domestic capex tailwinds and tax reform.”

Cisco shares are up more than 3.5 percent this week, building on strong gains from 2017. The stock jumped 26.7 percent last year. By comparison, the S&P 500 gained 19.4 percent in that time period.

Liani also noted Cisco has strong free cash flow and a low valuation compared to its competitors. “Cisco’s valuation discount versus the market has consistently widened over the last 5 years and Cisco is still one of the cheapest stocks versus all large-cap tech and networking peers,” the analyst said.