Will Cisco Earnings Give Any Clue to China Trade Talks?

By Chris Lange Updated Jan 30, 1:13PM EST · Published Nov 13, 11:20AM EST

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Will Cisco Earnings Give Any Clue to China Trade Talks? — © Justin Sullivan / Getty Images

Cisco Systems Inc. (NASDAQ: CSCO | CSCO Price Prediction) is scheduled to release its fiscal first-quarter financial results after the markets close on Wednesday. The consensus estimates are calling for $0.81 in earnings per share (EPS) and revenue of $13.09 billion. In the same period of last year, the company said it had EPS of $0.75 and $13.07 billion in revenue.

The company previously issued guidance for the fiscal first quarter. Cisco expected to see revenue flat to up 2% year over year and EPS in the range of $0.80 to $0.82. Gross margin was tabbed at 64% to 65% (compared to 63.9% in the fourth quarter of 2019) and operating margin was expected to come in at 32% to 33% (versus 32.6% in the fourth quarter).

The first-quarter outlook reflected little to no growth, and the U.S. trade question with China was unlikely to help Cisco.

In the fiscal fourth quarter, the company’s quarterly results were just barely enough to exceed estimates, but a narrow hit is no different from a big miss these days. For the 2019 fiscal year, sales in the company’s Asia-Pacific/Japan/China business unit rose 3% to $7.85 billion, but fourth-quarter sales were down 4% to $2 billion.

Excluding Wednesday’s move, Cisco had underperformed the broad markets, with the stock up nearly 12% year to date. In the past 52 weeks, the stock was up closer to 3%.

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A few analysts weighed in on Cisco ahead of the report:

RBC has a Buy rating with a $56 price target.
Piper Jaffray has a Neutral rating with a $51 target.
Baird’s Buy rating comes with a $54 target price.
Credit Suisse has a Neutral rating with a $49 price target.
KeyCorp rates it as Overweight with a $54 target price.
Goldman Sachs has a Neutral rating and a $48 price target.
Evercore ISI’s Outperform rating comes with a $60 target.

Shares of Cisco traded up less than 1% to $48.70 on Wednesday, in a 52-week range of $40.25 to $58.26. The consensus price target is $54.96.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.