Investing

Earnings Previews: Cisco Systems, Nvidia 

Analysts remain somewhat bullish on Cisco stock, with 13 of 28 having a Buy or Strong Buy rating and 14 more rating shares at Hold. At a recent price of around $44.75 a share, the upside potential based on a median price target of $54.00 is 20.7%. At the high price target of $73.00, the upside potential is 63.1%.

For Cisco’s first quarter of fiscal 2023, analysts are expecting revenue of $13.29 billion, which would be an increase of 1.4% sequentially and up 3% year over year. Adjusted EPS are forecast at $0.84, up 0.7% sequentially and 2.4% higher year over year. For the full fiscal year that ends in July, analysts estimate EPS of $3.53, up 5%, on revenue of $54.1 billion, up about 4.9%.

Cisco’s stock trades at 12.7 times expected 2023 EPS, 11.7 times estimated 2024 earnings of $3.81 and 11.2 times estimated 2025 earnings of $3.99 per share. The stock’s 52-week trading range is $38.60 to $64.28. Cisco pays an annual dividend of $1.52 (yield of 3.39%). Total shareholder return over the past year was negative 19.4%.

Nvidia

Chipmaker Nvidia Corp. (NASDAQ: NVDA) has had a miserable year. Well, its stock has: down more than 45% for the past 12 months, and the 52-week high due to roll off later this month.

There are plenty of reasons to be concerned. Crypto mining has been sinking all year, and it will not pick up soon. The market for graphics chips is, if not saturated, at least well-supplied. Most importantly, the data center market has cooled off as inflation and recession fears weigh on customers. One bit of good news is that Nvidia just went into production on a data center chip for the Chinese market that does not run afoul of U.S. export restrictions. But that will not affect third-quarter numbers.

In any event, analysts remain bullish on the stock, with 30 of 43 brokerages rating the stock at Buy or Strong Buy. Another dozen have Hold ratings. At a share price of around $163.00, the upside potential based on a median price target of $200.00 is about 22.7%. At the high target of $320.00, the upside potential is more than 96%.

For Nvidia’s fiscal third quarter, which ended in October, analysts expect revenue of $5.82 billion. That would be down 13.2% sequentially and by 22.0% year over year. Adjusted EPS are forecast to rise by about 38% sequentially to $0.70, a drop of more than 40% year over year. For the full 2023 fiscal year ending in January, analysts estimate EPS of $3.35, down 24.4%, and revenue of $26.98 billion, up just 0.2%.

Nvidia stock trades at 48.6 times expected 2023 EPS, 36.7 times estimated 2024 earnings of $4.44 and 29.6 times estimated 2025 EPS of $5.50 per share. The stock’s 52-week range is $108.13 to $346.47. Nvidia pays an annual dividend of $0.16 (yield of 0.1%). Total shareholder return for the past 12 months was negative 45.7%.

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