US tech firm Cisco Systems (CSCO) has earnings ahead on Wednesday after a recent rebound to the 2023 highs.
CSCO – Daily Chart
The price of CSCO trades around resistance at the $58 level and that will be key after the earnings.
Cisco reports their fiscal Q1 ’25 financial results after the market closes on Wednesday, with analyst estimates expecting revenue of $13.7 billion, which would mark 6% y-o-y growth. Analysts also expect operating income of $4.5 billion, marking a loss of -16% y-o-y growth.
Earnings per share is also expected to come in -22% lower over the same period at $0.87 per share. Despite the negative outlook, analysts expect it to be the last quarter of comparable slowdown after last year’s “inventory overhang”.
Estimates for the networking giant are expected to improve over the coming quarters. That will be important with the stock trading at highs from 2023.
With the company trading at 15x-16x EPS, that is expected to “average” 3% revenue growth and 4% EPS growth over the next 3 years, the company has low expectations for growth but the stock surge recently adds a risk.
Cisco has been trying for 25 years to reinvent itself after the dot.com bust, but its attempts to restructure the segments and move away from legacy telecoms has been slow. Many smaller acquisitions never worked, but the company made its largest acquisition last year with the tech company Splunk.
The company’s acquisition of Splunk is more interesting, but in fiscal Q4 ’24, Splunk was below the midpoint of its revenue guidance ($960 million in revenue vs. the $975 million estimate), which may not be a good sign at the early stages of the purchase.
Cisco did cross $1 billion in cumulative AI orders, which Jeffries analysts were positive about.
