Will Cisco Systems Outperform Again in Q3?

Cisco Systems Inc. (NASDAQ: CSCO | CSCO Price Prediction) is scheduled to release its fiscal third-quarter financial results after the markets close on Wednesday. The consensus estimates call for $0.71 in earnings per share (EPS) and revenue of $11.88 billion. In the same period of last year, the company said it had EPS of $0.78 and $12.96 billion in revenue. The company has beat earnings expectations by a penny or so per share in the past four periods.

Cisco previously issued guidance for the fiscal third quarter calling for EPS in the range of $0.79 to $0.81 and revenues declining 1.5% to 3.5% year over year.

In the fiscal second quarter, total revenue decreased 4% year over year, with product revenue down 6% and service revenue up 5%. Revenue by geographic segment was: Americas down 5%, EMEA down 3% and APJC down 1%. Product revenue performance was led by growth in Security, up 9%. Infrastructure Platforms and Applications revenue were each down 8%.

At the same time, deferred revenue was $18.7 billion, up 8% in total, with deferred product revenue up 19%. Deferred service revenue was up 2%.

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Excluding Wednesday’s move, Cisco stock had underperformed the broad markets with shares down nearly 10% year to date. In the past 52 weeks, it was down closer to 16%.

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

• KeyCorp has a Sector Weight rating.
• MKM Partners has a Neutral rating and a $40 target.
• Barclays has a Buy rating with a $48 target price.
• Credit Suisse rates it as Neutral with a $40 price target.
• Raymond James rates it as Outperform with a $48 target.
• Wells Fargo has an Overweight rating and a $50 target price.

Cisco Systems stock traded down less than 1% to $43.01 on Wednesday, in a 52-week range of $32.40 to $58.28. The consensus price target is $46.19.

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