Cisco Systems (CSCO) stock traded lower Thursday even after the networking equipment specialist's beat-and-raise quarter.
In the three months ended April 27, Cisco's revenue decreased 13% year-over-year to $12.7 billion and its earnings per share (EPS) slumped 12% to 88 cents. The company closed its acquisition of Splunk during the quarter, helping its total annualized recurring revenue increase 22% year-over-year to $29.2 billion.
"We delivered a solid Q3 performance in what remains a dynamic environment," said Cisco CEO Chuck Robbins in the press release. "Our unique ability to bring together networking, security, observability, and data enables Cisco to offer our customers unrivaled digital resilience for the [artificial intelligence] AI era."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The company's results easily beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $12.5 billion and earnings of 82 cents per share.
As a result of its better-than-expected fiscal third-quarter results, Cisco increased its revenue guidance for the fiscal year. It now expects revenue in the range of $53.6 billion to $53.8 billion, up from its previous range of $51.5 billion to $52.5 billion.
It also narrowed its earnings forecast for the full year, now anticipating earnings in the range of $3.69 to $3.71 per share, compared with its prior estimate for earnings of $3.68 to $3.74 per share.
Cisco's new outlook satisfied analysts' expectations. According to Yahoo Finance, Wall Street expects Cisco to report fiscal 2024 revenue of $53.1 billion and EPS of $3.67.
Lastly, Cisco declared a quarterly dividend of 40 cents per share, payable on July 24 to shareholders of record at the close of business on July 5. CSCO is one of the best dividend stocks on Wall Street, having raised its annual payout 12 years in row. Most recently, the company hiked its quarterly dividend by 3% in February.
Is Cisco stock a buy, sell or hold?
Although Cisco Systems is one of the Dow Jones stocks that is lower on a year-to-date basis, analysts are still very bullish on it. According to S&P Global Market Intelligence, the consensus analyst target price for CSCO stock is $54.07, representing implied upside of roughly 12% to current levels. Meanwhile, the consensus recommendation is Buy.
Financial services firm Oppenheimer is one of those bullish outlook toward Cisco, as evidenced by its Outperform (Buy) rating on the blue chip stock. Additionally, it has an above-consensus price target of $58, representing implied upside of about 20% to current levels.
Despite inventory issues that will likely pressure networking revenue through the end of this calendar year, the company's fiscal third-quarter results were "solid" and provided "early indications of a bottom in networking demand," Oppenheimer analyst Ittai Kidron wrote in a May 15 report.
"In addition, the company identified multiple tailwinds that can drive a reacceleration in growth for fiscal 2025," Kidron said, including AI and Splunk. "Still, the company will need to execute on its initiatives, and many of the benefits will take time to flow through."
Related Content
-
Student Visas: Older Americans' Ticket to Living in EuropeDo you envision strolling about Europe, a book in one hand, a glass of wine in the other? You could make that happen by studying there, even if you're older.
-
Three Reasons It May Be Time for an Annuity 'Refresh'Because of higher interest rates, inflation and newer annuity products, you could get a better deal today. Don't wait, though: Interest rates could start falling.
-
McDonald's Stock: How Small Changes Have Led to 100,000% ReturnsMcDonald's incremental operating improvements have added up over the years, sending the company's long-term profitability soaring.
-
Three Common Cash Flow Mistakes and How to Fix ThemBetter cash flow management could have a bigger impact on your retirement savings than simply making more money. Here's how to manage that.
-
Trusts for Child Influencers: What Families Need to KnowAs video blogging, or vlogging, gains popularity (and profitability), new laws are shaping financial obligations for caregivers of young creators.
-
Three Easy Financial Tips to Help Make This Year a SuccessEarly in a new year is the perfect time to assess where you are financially. Start by ensuring you're protected from fraud and evaluating your investments.
-
Stock Market Today: It's Mostly Onward and Upward for EquitiesThe major U.S. equity indexes were mixed Friday but closed an eventful week for earnings and data modestly higher.
-
Airbnb Stock Soars After Revenue, Earnings Top ExpectationsAirbnb stock soared Friday after the homestay and experiences platform beat fourth-quarter revenue and earnings expectations. Here's what you need to know.
