When Cisco Systems reports fiscal third-quarter earnings Wednesday, analysts will be looking for signs that the computer networking giant's business is deteriorating. CSCO stock has declined 1% thus far this year heading into the earnings report.
Cisco earnings will be released after the market close. Wall Street analysts forecast Cisco earnings of 97 cents, up 11% from a year earlier. Revenue for Cisco stock is expected to rise 12% to $14.39 billion.
New product orders will also be a key financial metric for CSCO stock.
CSCO Stock: Payment Plan To Boost July Quarter
In early May, Cisco launched its "Capital Business Acceleration Program." It allows customers who place orders before July 29 to defer payments until 2024. "Cisco Capital flexes its muscle on occasion, so this is not a new play," Raymond James analyst Simon Leopold said in a note to clients. "Bears may see the move as a sign of weakness. Bulls will look at it as (Cisco) leveraging its balance sheet advantage versus competitors."
The deferred payment plan likely will help boost orders in the July quarter, analysts say.
At Barclays, analyst Tim Long said in his note to clients: "We expect a decline of 25% to 30% in orders year-over-year for the April quarter."
Meanwhile, Morgan Stanley analyst Meta Marshall said in a note: "Heading into Q3 we expect backlog to continue to provide support to revenue, putting more risk on the orders number as checks continue to point to softer enterprise demand."
Marshall expects federal government orders to be strong.
Cisco stock dipped 0.4% to close at 46.92 on the stock market today.
Order Decline Expected In April Quarter
Heading into the Cisco earnings report, the company owned a Relative Strength Rating of 65 out of a best-possible 99, according to IBD Stock Checkup.
Further, Cisco stock declined 30% in 2022.
In addition, Cisco has shifted away from its core business of selling network switches and routers. With acquisitions, Cisco has aimed to increase revenue from software and services.
"Orders were likely soft during the April quarter," CSCO stock analyst David Vogt of UBS said in a note. "While we expect in-line fiscal Q3 revenue and EPS as improving supply chain drives a faster backlog drawdown, product orders could be down 15% to 20%, versus minus 22% in fiscal Q2."
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