Cisco stock price surges 6% on earnings beat

Cisco stock price surges 6% on earnings beat

  • Cisco reports adjusted earnings of $0.79 pre share, higher than $0.69 per share expected from the market
  • Revenue comes in at $11.98 billion, again better than $11.70 billion expected, 8% down on a year-to-year basis
  • Cisco stock price surged 6%, hits new 11-week high

Shares of Cisco Systems (NASDAQ: CSCO) jumped 6% today after the tech giant reported better-than-expected results for its fiscal third-quarter. 

Fundamental analysis: Slowdown in business activity noted in April 

Cisco reported adjusted earnings of $0.79 per share, higher than $0.69 per share expected from the market. Moreover, the tech giant said it recorded a revenue of $11.98 billion, again better than $11.70 billion expected from Wall Street, but 8% lower compared to the year ago.

“During this extraordinary time, our priority has been supporting our employees, customers, partners and communities, while positioning Cisco for the future,” said Chuck Robbins, chairman and CEO of Cisco, in a press release.  

“The pandemic has driven organizations across the globe to digitize their operations and support remote workforces at a faster speed and greater scale than ever before.  We remain focused on providing the technology and solutions our customers need to accelerate their digital organizations.”

Cisco said that its biggest unit – Infrastructure Platforms – that generates more than half of the company’s revenue, recorded a 15% plunge in revenue on a year-to-year basis. Moreover, the orders slowed down in April, said Kelly Kramer, CFO of Cisco.

“We executed well in Q3 in a very challenging environment, delivering strong margins and non-GAAP EPS growth”.

“The resiliency that we have been building into our business model is paying off, with software subscriptions now at 74% of our software revenue, up 9 points year over year. We are focused on driving long-term profitable growth while delivering shareholder value,” Kramer said.

Cisco expects to earn between $0.72 and $0.74 in its fiscal fourth quarter, higher than $0.69 per share expected from the surveyed analysts. The expected profit is 8.5% to 11.5% lower compared to a year ago. 

Technical analysis: New 11-week high

Shares of Cisco surged higher following the better-than-expected results for the fiscal third quarter. The stock price went north of $44.50 for the first time since February. 

Cisco stock daily chart (TradingView)

A close above $43.50 would pave the way for a stronger push higher given that this is a very important technical level for the price action, consisting of the 100-DMA and horizontal resistance. A pullback to this level is likely to facilitate an attractive opportunity to buy Cisco stock from the risk-reward perspective.

If the buyers are able to sustain the positive momentum, Cisco has room to move above $45 where the 200-DMA trades. 

Summary

Shares of Cisco are trading around 6% higher today after the tech giant topped analysts’ expectations for the fiscal third-quarter earnings and revenue. However, the company said it experienced a slowdown in orders in April, which is likely to weigh on the Q4 performance. 

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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