Q4 Preview: Cisco (CSCO) Could Gain on Improved Market Position, But Outlook Remains Focus


Cisco Systems, Inc. (Nasdaq: CSCO) shares are trading strong Wednesday, heading into the networking giant's fourth-quarter 2012 performance report.

Currently, the Street is looking for Cisco to report 15 percent of profit growth to 46 cents per share with just 3.7 percent of sales growth to $11.61 billion. Estimize consensus numbers peg Cisco with EPS of 47 cents and sales of $11.59 billion.

Over the last several quarters, Cisco has bested analyst EPS expectations by better than 7 percent, though shares have shown weakness based on the company's outlook, which has typically been weaker than expected.

Shares of Cisco moved 21 percent lower in the quarter to $15.95 at the end of July. The stock is up 9.3 percent since then, but down 2.4 percent in 2012.

Analyst View
Data from Streetinsider's Ratings Insider has 26 analysts with a Buy rating on Cisco, 18 at Neutral, and one with a Sell.

The Street's price target average is $21, ranging from $17 to $27. Over the last year, Cisco shares have moved between $14.90 and $21.30.

Analyst Comments
  • Goldman Sachs sees EPS of 46 cents on sales of $1.76 billion. Goldman likes prospects for Cisco moving forward. The firm said a recent survey of 1000 IT executives "showed that 53% of respondents expect to increase their spending with Cisco over the next 12 months. Importantly, this represents the highest level since 2H 2008, putting this data series back into the 50-70% range that we have historically considered "healthy" for Cisco."

    In addition, Goldman stated "our just published VAR survey points to stronger than expected growth for network infrastructure in 2012 and for Ethernet switching in particular."

  • BGC Partners is looking for EPS of 47 cents and revs of $11.7 billion. BGC cautions on expected light guidance, saying, "[o]ur expectation for growth in the core business is revenue growth of 3.4% YoY and a 0.6% decline sequentially...With Cisco restructuring operations and tightening its focus on its core businesses, we see revenue growth of 6.6% YoY in fiscal year 2012 and adjusted net income growing much faster at 26.5% YoY."

  • Deutsche Bank is modeling EPS of 44 cents on revs of $11.48 billion, with the firm noting how the quarter likely saw "above target" sales trends in datacenter. The firm commented, "Campus switching could see a BYOD-driven ramp from midyear+. In routing, we see a volume ramp for the ASR 9k/5k in the back-half, at AT&T, Verizon, etc. A key insight from our disty conversations was early signs of IT spending improvement in some US large enterprise verticals (big banks, manufacturing, auto, etc) - a positive setup for October."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Cisco's past performance at Streetinsider's Cisco's Income Statement .

Cisco will be holding a webcast at 4:30pm EDT to discuss results. Click here to go to Cisco's IR website and acess the event.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Earnings , Stocks

Referenced Stocks: CSCO



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