Cisco Systems (CSCO) a leading networking equipment company, exceeded expectations for its quarterly profit and sales in its latest report. However, executives did not raise their top target for annual revenue and revealed a decline in orders, causing a 4% drop in the company’s shares during late trading. The result in sales of approximately $15.07 billion at the midpoint. Analysts had forecasted adjusted earnings of $1.04 per share and revenue of $14.95 billion for the fourth quarter.
While Cisco increased its annual profit guidance, it did not raise the ceiling on revenue growth for the year, as some analysts had expected. Cisco’s full-year revenue growth target remains at 10% to 10.5%, up from the previous guidance of 9% to 10.5%. Analysts had anticipated an increase in the company’s full-year revenue forecast, considering its strong performance in recent months.
Chief Financial Officer Scott Herren expressed confidence in the company’s ability to increase its full-year guidance, citing a healthy backlog, recurring revenue streams, and improving supply availability. While supply chain issues have improved, the backlog remains double its normal size. However, analysts raised concerns about declining orders and the implications for future demand. The decline in orders for the most recent quarter was reported at 23% following a 22% drop in the previous quarter. This has led to speculation about the strength of future demand, which may only be answered when executives provide guidance for the next fiscal year.
Cisco’s CEO, Chuck Robbins, defended the declining order figures by emphasizing the unprecedented demand the company experienced during the pandemic. He suggested that sequential order rates provide more relevant information than year-over-year rates and noted that the sequential figures for the third quarter were within historical ranges.
Looking forward, Robbins projected modest revenue growth for fiscal 2024, building upon the company’s strong performance in fiscal 2023. He also mentioned the expectation of delivering higher earnings per share growth than revenue in the fourth quarter and fiscal 2024, driven by improving gross margins and effective expense management. Cisco’s product and service businesses both saw year-over-year growth, with product revenue amounting to $11.1 billion and service revenue reaching $3.5 billion. FactSet analysts had estimated product revenue of $10.9 billion.
CSCO Stock Analysis & Forecast
According to a forecast from 21 analysts, the average target price for Cisco Systems Inc over the next 12 months is USD 57.33. The analysts have given Cisco Systems Inc an average rating of Buy. Stock Target Advisor’s own analysis of Cisco Systems Inc suggests a slightly bullish outlook, based on 8 positive signals and 4 negative signals. As of the last closing, Cisco Systems stock price was USD 47.63. The stock price has experienced a positive change of +1.97% over the past week, a negative change of -5.27% over the past month, and a negative change of -5.87% over the past year.
