Cisco Systems (CSCO) is set to release its fiscal fourth-quarter earnings report on August 14, 2024, with investors anticipating continued challenges. The stock has fallen 10% this year, despite the recent $25 billion acquisition of software company Splunk (SPLK).
Analysts project a third consecutive quarterly decline in both earnings and revenue. They forecast earnings per share (EPS) at 85 cents, a 26% decrease, and revenue to drop by 11% to $13.5 billion.
Cisco has projected modest revenue growth for fiscal 2025, forecasting a “low to mid-single-digit” increase, with a slightly higher growth rate of 4% to 6% anticipated for fiscal 2026 and 2027.
Raymond James analyst Simon Leopold noted that while Cisco is expected to meet July quarter expectations, concerns about macroeconomic conditions and slower recovery might result in a less optimistic outlook than consensus. Similarly, Morgan Stanley’s Meta Marshall highlighted a cautious sentiment among investors, who are waiting for clearer signals of top-line growth before increasing their positions.
The long-term outlook for Cisco may hinge on its acquisition of Splunk and its shift towards software and subscription-based services, aiming to reduce reliance on traditional networking hardware sales. Splunk’s expertise in data analytics and cybersecurity could drive future growth, especially with the increasing demand for AI-driven solutions.
Cisco’s focus on software and AI could potentially boost its revenues, particularly with $1 billion in AI product orders expected by fiscal 2025. However, competition is intensifying, notably from Hewlett Packard Enterprises’ acquisition of Juniper Networks, which could challenge Cisco’s market position.
Despite a 6% increase in Cisco stock in 2023, current technical indicators reflect weakness. The stock holds a Relative Strength Rating of 23 and an IBD Composite Rating of 52, with an Accumulation/Distribution Rating of C-minus. Cisco’s stock is currently in a phase where it needs to establish a new base to present a more compelling investment opportunity.
I’m a finance writer with three years of experience in investment analysis. At Investorwelcome , I translate complex financial concepts into clear, actionable insights to help investors navigate the market with confidence. Combining my solid academic background with practical industry knowledge, I’m dedicated to providing readers with accurate and timely information. My goal is to empower both new and seasoned investors by simplifying intricate data and offering strategic advice. When I’m not writing, I stay engaged with market trends and investment innovations to ensure my content remains relevant and valuable.
