Cisco Systems to report Q1 earnings November 14

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What's Happening

Cisco Systems ( CSCO ) will release its fiscal first-quarter results November 14. The company will report after the market close, with the consensus calling for earnings of $0.72 per share, up from $0.61 during the same period last year. CSCO has appreciated 21.5% year to date.

Technical Analysis

CSCO was recently trading at $47.06 down $2.41 from its 12-month high and $13.39 above its 12-month low. InvestorsObserver's Stock Score Report gives CSCO a 94 long-term technical score and a 94 short-term technical score. The stock has recent support above $44 and recent resistance below $49. Of the 20 analysts who cover the stock 15 rate it Strong Buy, 3 rate it Buy, 2 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, CSCO gets a score of 81 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Cisco has a fantastic earnings track record and has posted better than expected earnings and sales each of the last three quarters. The street expects Cisco to post a $0.02 earnings beat with a whisper number of $0.74 for the quarter. The stock sold off a bit with the overall market in October, but as the overall market has improved CSCO has already erased most of its recent losses and is approaching its 52-week high set in early October. Analysts remain upbeat on the stock with the company expected to grow earnings by 15% for the full year, and by an average annual rate of 9% over the next five years. The entire tech sector has been hot, and while CSCO has managed to gain just over 21% during the year the stock remains at a reasonable price with a forward P/E of just 14.3. The current valuation definitely allows for CSCO shares to make gains on a better than expected quarterly report, and the 20 analysts who cover the stock have an average price target of $51.88. CSCO is currently trading at $47.06.

Stock Only Trade

If you're looking to establish a long stock position in CSCO consider buying the stock under $47. Sell if it falls below $43.50 or take profits if it gets to $54.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 12/21/18 38/43 bull-put credit spread for a $0.40 credit. That's a potential 8.7% return (76% annualized*) and the stock would have to fall 9.5% to cause a problem.

Bearish Trade

There are not bearish hedged trades we like at this time.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 12/21/18 $48 covered call. Buy CSCO shares (typically 100 shares, scale as appropriate), while selling the 12/21/18 $48 call for a debit of $45.56, per share. The trade has a target assigned return of 5.4%, and a target annualized return of 46.5% (for comparison purposes only).

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

Originally published on InvestorsObserver.com

This article appears in: Investing , Options
Referenced Symbols: CSCO

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