Cisco’s upbeat guidance suggests all is ‘going really well for them’

Shares of Cisco Systems Inc (NASDAQ: CSCO) jumped about 8.0% in extended trading after the networking equipment company reported market-beating results for the holiday quarter.

Cisco stock up on raised guidance

Investors are happy also because the management expects that strength to continue moving forward. Cisco expects its revenue to fall between $14.25 billion and $14.5 billion in the current quarter on 96 cents to 98 cents of adjusted per-share earnings.

In comparison, analysts had called for $13.58 billion and 89 cents a share, respectively. Discussing its quarterly update on Yahoo Finance, Morningstar analyst William Kerwin said:

Cisco’s outlook for the full year

For the full year, Cisco is now calling for up to 10.5% annualised growth in revenue versus a much narrower 6.5% increase it had guided for earlier. Executives also raised their outlook of adjusted EPS to $3.73 to $3.78 on Wednesday.

Both product and services noted year-over-year growth and surpassed expectations in the recent quarter. In Q2, Cisco’s core networking division brought in $6.75 billion in revenue versus $5.9 billion last year and $6.52 billion expected. Kerwin added:

For the year, Cisco stock is now up close to 10%.

Cisco’s Q2 earnings snapshot

• Net income printed at $2.8 billion versus the year-ago $3.0 billion
• Per-share earnings also declined from to 71 cents to 67 cents
• Adjusted EPS printed at 88 cents as per the earnings press release
• Revenue went up 7.0% on a year-over-year basis to $13.6 billion
• Consensus was 85 cents adjusted EPS on $13.42 billion revenue
• Total annualised recurring revenue climbed 6.0% to $23.3 billion

Cisco increased its dividend too

The Nasdaq-listed firm also raised its quarterly dividend by 3.0% to 39 cents a share. Kerwin also reiterated that Cisco Systems has a wide moat.

The supply picture is also improving faster than expected for the tech company, he added. The Morningstar analyst has a $54 price target on Cisco stock that suggests another 3.0% upside on top of the after-hours price action.