With a surprisingly positive revenue forecast, U.S. network equipment maker Cisco (NASDAQ: CSCO) has raised hopes that spending on technical infrastructure will be more stable than expected.
Revenues are expected to rise by 11 to 13 percent in the current quarter, the company announced Wednesday after the U.S. stock exchange closed in San Jose. Analysts had previously expected an increase of only six percent.
Cisco Surprises with Strong Revenue Forecast and Exceeds Expectations, Boosting Investor Confidence in IT Spending
The profit forecast also exceeded the expectations of experts. Per share it should be 96 to 98 US cents. Until recently, analysts had expected only 89 cents.
In the first quarter of the year, sales climbed by seven percent to 13.6 billion US dollars. Profits, on the other hand, fell by seven percent to 2.8 billion dollars.
Cisco primarily manufactures so-called routers and switches for Internet and data traffic. The company is benefiting from a backlog of investments that many customers had held back during the Corona pandemic.
Networking equipment maker Cisco gave investors hope Thursday for robust IT spending by customers. Investors showed enthusiasm, with Cisco’s stock price gaining 5.62 percent at one point to $51.18 in NASDAQ trading. They were the only gainers in New York’s benchmark index, which fell 0.75 percent at the same time.
The company raised hopes with a surprisingly positive quarterly forecast. Revenues are expected to rise by 11 to 13 percent in the current quarter. Analysts had previously only expected an increase of six percent. The profit forecast of 96 to 98 cents per share also exceeded the expectations of experts. Until recently, analysts had expected only 89 cents.
Expert Analysis: Cisco’s Strong Performance and Positive Outlook Support Buy Recommendations
The expert Ingo Wermann of the DZ bank took the good news then also immediately to the cause, in order to pronounce for the papers a buy recommendation. The expert emphasized that Cisco is benefiting from the “disruption” of supply chains and the high demand for routers, switches and security solutions. He also sees the higher share of recurring revenues and the growing importance of the software business as positive factors. The company’s high dividend yield for the IT sector, solid balance sheet and extensive share buybacks are further buy arguments, he said.
According to Evercore ISI expert Amit Daryanani, Cisco’s expectations were considerably exceeded in the past quarter. Equally important, however, is the outlook for 2023, with revenue growth expected to reach ten percent. Here, the analyst consensus has so far been only six percent. The same applies to the earnings per share target. He praised Cisco for expressing less concern about the economy than other major tech groups.