Cisco in the spotlight ahead of earnings report – Stock Market News
May 16, 2018 3:26 pm
Technology conglomerate Cisco Systems is due to release its earnings report for Q1 2018 on Wednesday after Wall Street’s closing bell. The consensus recommendation for the firm is a “buy”, in line with the average recommendation for Communications Equipment, its peer group.
The California-based technology giant is anticipated to report earnings per share (EPS) of $0.65 for the first quarter of 2018, according to twenty-eight analysts submitting their forecasts to the Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S). These projections range from $0.63 for the most bearish analyst, to $0.67 for the most bullish one.
Should the actual number match the forecast of $0.65, that would represent an increase of 8.5% from the same period last year, when the multinational earned $0.60 per share. Cisco’s earnings exceeded the consensus estimate three times over the past four quarters, while they came in line with expectations once.
Another upside surprise in earnings could generate fresh buying interest for the corporation’s stock, which currently hovers at $45.43. Immediate resistance to advances may be found at $45.89, a level that halted the price advance on February 28. A break above that hurdle would shift attention to the 18-year high of $46.37 recorded last week, with even further bullish moves opening the way for the round figure of $48.00, which is also the low of November 13, 2000. Further up, the psychological area of $50 would increasingly come into focus.
On the downside, and in case of a disappointment in the earnings numbers, the stock could encounter initial support at $44.93, the low posted on May 15. Further down, attention would turn to $43.44, the trough of May 3. Should the bears violate that zone as well, then declines may stall near the April 25 low of $42.75. Notice that the 100-day moving average is not far below, at $42.61. It should also be noted that the greater the deviation between the expected and the actual EPS results, the bigger the price move in a stock tends to be.
In terms of the stock’s short-term picture, it appears to be cautiously positive as the RSI still lies above its neutral level. That said, the RSI is currently pointing downwards and looks to be headed towards its neutral threshold of 50, which is a sign that bullish momentum is weakening.
Beyond the EPS figures, other areas of interest for investors may be the company’s revenue growth, as well as its cash holdings. Last quarter, Cisco reported a revenue increase for the first time in two years, and forecast growth for the quarter that will be reported today in the neighborhood of 3% – 5%, igniting hopes that it is putting itself back to a trajectory of continued revenue growth. Moreover, it announced plans to repatriate $67 billion it held outside the US due to the latest tax overhaul, allocating as much as $44 billion over the next couple of years to stock buybacks and dividends.
Cisco is a Dow Jones, S&P 500, and Nasdaq 100 component company. Prior to Wednesday’s market open, the corporation’s stock was trading higher by 18.75% year-to-date, notably outperforming all three benchmarks. The Nasdaq 100 is up by 7.69% and the S&P 500 is 1.42% higher so far in 2018, while the Dow Jones is lower by 0.05%. Wall Street analysts’ mean and median price targets on Cisco are $49.63 and $50.00 respectively.
On a final note, and staying on the subject of performance, it’s interesting that Cisco’s stock weathered the volatility in equity markets that started in late January and has posted higher highs since, while several of its major peers have been moving sideways – indicating the share’s resilience to short-term swings in market sentiment. This does not go to say that Cisco’s price can’t decline due to concerns about rising interest rates and global trade – it can – but rather that it may be able to endure such worries better than most of its counterparts.
Technology conglomerate Cisco Systems is due to release its earnings report for Q1 2018 on Wednesday after Wall Street’s closing bell. The consensus recommendation for the firm is a “buy”, in line with the average recommendation for Communications Equipment, its peer group.
The California-based technology giant is anticipated to report earnings per share (EPS) of $0.65 for the first quarter of 2018, according to twenty-eight analysts submitting their forecasts to the Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S). These projections range from $0.63 for the most bearish analyst, to $0.67 for the most bullish one.
Should the actual number match the forecast of $0.65, that would represent an increase of 8.5% from the same period last year, when the multinational earned $0.60 per share. Cisco’s earnings exceeded the consensus estimate three times over the past four quarters, while they came in line with expectations once.
Another upside surprise in earnings could generate fresh buying interest for the corporation’s stock, which currently hovers at $45.43. Immediate resistance to advances may be found at $45.89, a level that halted the price advance on February 28. A break above that hurdle would shift attention to the 18-year high of $46.37 recorded last week, with even further bullish moves opening the way for the round figure of $48.00, which is also the low of November 13, 2000. Further up, the psychological area of $50 would increasingly come into focus.
On the downside, and in case of a disappointment in the earnings numbers, the stock could encounter initial support at $44.93, the low posted on May 15. Further down, attention would turn to $43.44, the trough of May 3. Should the bears violate that zone as well, then declines may stall near the April 25 low of $42.75. Notice that the 100-day moving average is not far below, at $42.61. It should also be noted that the greater the deviation between the expected and the actual EPS results, the bigger the price move in a stock tends to be.
In terms of the stock’s short-term picture, it appears to be cautiously positive as the RSI still lies above its neutral level. That said, the RSI is currently pointing downwards and looks to be headed towards its neutral threshold of 50, which is a sign that bullish momentum is weakening.
Beyond the EPS figures, other areas of interest for investors may be the company’s revenue growth, as well as its cash holdings. Last quarter, Cisco reported a revenue increase for the first time in two years, and forecast growth for the quarter that will be reported today in the neighborhood of 3% – 5%, igniting hopes that it is putting itself back to a trajectory of continued revenue growth. Moreover, it announced plans to repatriate $67 billion it held outside the US due to the latest tax overhaul, allocating as much as $44 billion over the next couple of years to stock buybacks and dividends.
Cisco is a Dow Jones, S&P 500, and Nasdaq 100 component company. Prior to Wednesday’s market open, the corporation’s stock was trading higher by 18.75% year-to-date, notably outperforming all three benchmarks. The Nasdaq 100 is up by 7.69% and the S&P 500 is 1.42% higher so far in 2018, while the Dow Jones is lower by 0.05%. Wall Street analysts’ mean and median price targets on Cisco are $49.63 and $50.00 respectively.
On a final note, and staying on the subject of performance, it’s interesting that Cisco’s stock weathered the volatility in equity markets that started in late January and has posted higher highs since, while several of its major peers have been moving sideways – indicating the share’s resilience to short-term swings in market sentiment. This does not go to say that Cisco’s price can’t decline due to concerns about rising interest rates and global trade – it can – but rather that it may be able to endure such worries better than most of its counterparts.
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