Shares in Cisco Systems rose Thursday amid July-quarter earnings that topped estimates while the company's revenue outlook for fiscal 2024 came in below views. CSCO stock initially fell, then reversed up after management commented on business trends.
For the period that ended July 29, Cisco earnings rose 37% to $1.14 per share. Revenue climbed 16% to $15.2 billion. Analysts estimated that Cisco would earn $1.06 per share on revenue of $15.05 billion, according to FactSet.
Cisco officials say product order growth, a key financial metric, came in strong during the quarter. But the outlook for fiscal 2024 isn't clear.
On a year-over-year basis, product orders fell 14% in the July quarter. But they rose 30% from the April quarter. Analysts had called for a year-over-year decline in a range of 15% to 20%.
"Cisco expects to have normalized backlog at the end of fiscal Q1 2024, which suggests that it could report greater order declines next quarter, and experience a steeper than seasonal decline in the January quarter," Raymond James analyst Simon Leopold said in a note to clients.
At Barclays, analyst Tim Long said in his note to clients: "Even though fiscal Q4 orders were above our prior expectation, they were not enough to change the view of flat-to-slightly up fiscal 2024 revenues."
Cisco stock climbed 2.2% to 54.10 before the market open on the stock market today. The computer networking giant reported earnings after the market close on Wednesday.
Cisco Stock: Revenue Outlook Light
For fiscal 2024, Cisco said it expects sales of $57.6 billion at the midpoint of its outlook, up about 1% year over year. Analysts had predicted 2.7% sales growth to $58.38 billion. Fiscal 2024 starts with the September quarter.
Cisco predicted earnings in a range of $4.01 to $4.08 a share vs. analyst estimates of $4.05 a share. That forecast is up 6% from fiscal 2023.
Capital spending by cloud computing and telecom customers is expected to slow in 2024. But corporate and government spending should be bright spots.
Heading into the Cisco earnings report, the company owned a Relative Strength Rating of 86 out of a best-possible 99, according to IBD Stock Checkup. CSCO stock had advanced 12% thus far for 2023.
In addition, CSCO stock has shifted away from its core business of selling network switches and routers. With acquisitions, Cisco aims to increase revenue from software and services.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
