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The Street is Positive on Cisco Systems (CSCO) Results

Updated  

Aug-18 13:31 first published at 13:31 PM


Receive instant notifications when new information about your stocks becomes available. Click here to sign up for a one-week free trial of StreetInsider Premium. Cisco Systems (NASDAQ: CSCO) shares are up nearly 5% in premarket trading after the IT networking company reported strong results. Cisco reported an adjusted EPS of $0.83 on revenue of $13.10 billion in its fiscal fourth quarter, exceeding the analyst consensus of $0.82 on sales of $12.73 billion. The adjusted gross margin was 63.3%, which was lower than the estimate of 64.7%. “Total revenue exceeded our expectations in Q4 as a result of our strong execution and the numerous initiatives we have taken to mitigate the impact of the global supply situation,” said Cisco CFO Scott Herren. The company expects adjusted EPS of $0.82 to $0.84 for the current quarter, which is slightly lower than the consensus of $0.84. However, revenue growth is expected to be +2% to +4%, which is significantly higher than the -0.24% consensus. On a year-to-year basis, the company anticipates revenue growth of +4% to +6%, which is higher than the previous estimate of +3.3%. The adjusted EPS is expected to be in the $3.49-$3.56 range, which is in line with the $3.54 guidance. Citi analyst Jim Suva raised his price target on Cisco shares to $44 from $40, but he remains concerned that Cisco will continue to lose market share to both Arista Networks (NYSE: ANET) and Juniper Networks (NYSE: JNPR). “”Are we mistaken in assigning a sell rating?” The sales forecast of +2% to +4% growth is significantly higher than the consensus of -0.6%, but the EPS guidance was only in line. Order growth has slowed to -6% year on year. Yes, difficult y/y comps have an impact on orders, but peers Arista and Juniper are navigating the cycle better. So it’s difficult to say whether we’re wrong or right at this point because the results and outlook give both bulls and bears plenty of ammunition,” the analyst said. He also stated that Cisco’s performance bodes well for Jabil (NYSE: JBL), Citi’s top pick in the IT Hardware coverage. Tai Liani, a BofA analyst, weighed in favorably on the results. “We believe Cisco’s commentary and results are generally positive, but there are some areas that are less than ideal, due in part to tough comps,” Liani wrote in a note. Senad Karaahmetovic wrote this.

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