Shares in Cisco Systems climbed Thursday as analysts mulled the company's 'modest' outlook for revenue growth in fiscal 2024, which starts with the September quarter. CSCO stock initially fell, then climbed on fiscal third-quarter earnings and revenue that topped estimates.
For the period ended April 30, Cisco earnings were $1 per share, up 15% from a year earlier, the company said. Revenue for CSCO stock came in at $14.6 billion, up 14%, including acquisitions. Analysts expected Cisco earnings of 97 cents a share on sales of $14.39 billion for its third fiscal quarter of 2023.
A year earlier, Cisco earnings were 87 cents a share on sales of $12.83 billion.
The tech giant reported results after the market close on Wednesday. CSCO stock ended the trading session 1.2% higher to 48.20 on the stock market today.
CSCO Stock: Fiscal 2024 Revenue Growth Eyed
Cisco did not issue a preliminary outlook for fiscal 2024. But analysts focused on April-quarter business trends.
The 23% order growth decline in the April followed a 22% decline in the January quarter. Orders surged in early calendar 2022.
At Raymond James, analyst Simon Leopold said in note to clients that the Cisco stock retreat "may reflect fiscal 2024 growth below expectations." He added, "(Fiscal Q3) orders declined 23% year-over-year, which is greater than last quarter and expectations but this is part of normalization. Bookings were up 21% and are implied to improve materially in July."
At Goldman Sachs, analyst Michael Ng said in his report: "Fiscal 2024 revenue guidance is undoubtedly benefiting from backlog reduction (expectations for $4 billion to $5 billion reduction in backlog in fiscal 2024 from fiscal 2023 year-end), which contributes to the investor debate around true underlying demand."
Further, Jefferies analyst George Notter said in a report: "For fiscal 2024, our revenue estimate bumps up from $58.67 billion to $58.71 billion." That reflects projected 3% revenue growth from an estimated $56.845 in fiscal 2023.
And at Evercore ISI, analyst David Togut said in his note: "Cisco indicated they expect 'modest revenue growth' in fiscal 2024 and EPS should grow at a faster rate than revenue."
Cisco Stock: Shift To Subscription Software
For the current period ending in July — its fiscal fourth quarter — the company forecasts earnings of $1.06 a share vs. estimates of $1.04 per share.
Meanwhile, Cisco said it expects revenue growth of 15% versus projections for 14% growth to $14.95 billion.
Heading into the Cisco earnings report, the tech stock had retreated nearly 2% in 2023. CSCO stock owned a Relative Strength Rating of 63 out of a best-possible 99, according to IBD Stock Checkup.
Cisco has shifted away from its core business of selling network switches and routers. With acquisitions, Cisco aims to increase revenue from software and services.
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