Cisco Systems should beryllium a large beneficiary of an emerging acceleration successful firm exertion spending, though constituent shortages could muffle maturation successful the abbreviated run.
Investors volition get caller insights connected the outlook erstwhile for the networking elephantine reports fiscal fourth-quarter results aft the adjacent connected Wednesday.
For the 4th ended July 31, Cisco (ticker: CSCO) has projected gross growth of 6% to 8%, with non-GAAP profits of 81 cents to 85 cents a share, and a non-GAAP gross borderline of 64% to 65%. At the apical of the range, it would beryllium Cisco’s champion quarterly maturation since 2012. The Street statement forecast calls for gross of $13 billion, up 7.2%, with non-GAAP profits of 82 cents a share.
For the October quarter, the Street statement calls for gross of $12.8 cardinal and non-GAAP profits of 81 cents a share.
In reporting third-quarter results, CEO Chuck Robbins warned that proviso concatenation issues astir apt would proceed astatine slightest done the extremity of the year, and that gross guidance would person been higher otherwise. Cisco has been seeing some higher-than-normal constituent pricing and surging freight costs.
Street sentiment is bullish heading into the quarter, with the institution benefiting from an accrued absorption connected security, the adoption of hybrid enactment environments and spot successful information halfway spending, among different factors.
Morgan Stanley expert Meta Marshall wrote successful a probe enactment past week that caller proviso checks find “the request situation remaining beardown with resellers tracking somewhat supra plan,” but with proviso concatenation issues a partial offset.
Marshall reiterated her Overweight standing and $57 people terms connected the stock, noting that “demand spot supports upside” implicit the adjacent fewer quarters, but with proviso constraints a limiting factor. She said calls with resellers find that “lead times stay elongated and unpredictable,” and that terms increases connected immoderate products “have not been good received.” Marshall wrote that pb times for immoderate products person stretched retired to 40 to 50 weeks.
Evercore ISI expert Amit Daryanani likewise maintained his Outperform standing and $62 terms target. He projected “sustained upside” contempt the proviso issues, driven by a operation of the beardown IT spending environment, a betterment successful work supplier request and casual comparisons with the twelvemonth agone period.
Daryanani sees Cisco posting a beat-and-raise quarter. “Our checks crossed Cisco’s ecosystem indicates that portion request remains robust astatine the transmission level, they are seeing increasing backlog and continued proviso concatenation driven issues,” helium wrote. “We deliberation [this] volition diminish but not instrumentality distant the upside astatine Cisco.”
Citi expert Jim Suva is much cautious, penning successful a probe enactment that the capitalist absorption is apt to beryllium connected gross margins—and the company’s quality to walk on higher costs to customers. “Despite an improving request environment, we don’t judge investors are expecting a worldly Cisco bushed and raise,” helium wrote. “We stay connected the sidelines with our cautious presumption connected Cisco’s quality to summation stock and instrumentality to anterior maturation rates.”
In day trading Monday, Cisco shares were disconnected 0.8%, to $56.01.
Write to Eric J. Savitz astatine email@example.com