Cisco’s Q3 Earnings: Positive Surprise for Investors!


Sep. 4 2020, Updated 6:55 a.m. ET

Cisco (NASDAQ:CSCO) stock gained around 2% in after-hours trading on Wednesday following its third-quarter results. The company reported better-than-expected results in the third quarter of fiscal 2020, which ended in April, despite coronavirus fears. The hardware company also provided a better-than-expected earnings outlook for the fourth quarter.

In the third-quarter press release, Cisco CEO Chuck Robbins said, “The pandemic has driven organizations across the globe to digitize their operations and support remote workforces at a faster speed and greater scale than ever before. We remain focused on providing the technology and solutions our customers need to accelerate their digital organizations.”

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Cisco’s Q3 earnings results

In the third quarter, Cisco reported an adjusted EPS of $0.79 compared to $0.78 in the third quarter of fiscal 2019. The earnings beat analysts’ consensus estimate of $0.69 per share. Cisco generated revenue of $11.98 billion—a reduction of 7.5% from the third quarter of fiscal 2019. The company beat analysts’ consensus revenue expectation of $11.70 billion. Cisco’s Infrastructure Platform sales fell 15% YoY (year-over-year) to $6.4 billion. The revenues from Applications fell 5%, while Security sales rose 6%.

Cisco also estimated a revenue reduction of 8.5%–11.5% year-over-year in the fourth quarter of fiscal 2020 with a non-GAAP EPS of $0.72–$0.74. Analysts estimated a non-GAAP EPS of $0.71 in the fourth quarter, which drove Cisco stock higher.

Overall, analysts expect -5.6% and 1.2% growth in the company’s fiscal 2020 and 2021 sales, respectively. Analysts also expect an adjusted EPS of $3.11 and $3.14 in fiscal 2020 and 2021, respectively.

What are analysts saying about Cisco stock?

Currently, 28 Wall Street analysts cover Cisco stock. Among the analysts, 14 recommend a “buy,” and 14 recommend a “hold.” None of the analysts recommend a “sell.” Analysts’ mean target price on the stock is $47.10, which implies a 12.3% gain from the current level of $41.95. The consensus target price for the stock has risen from $46.68 in April—a rise of about 1%.

Many analysts changed their target price for Cisco stock after its third-quarter financial results.

  • Jefferies increased its target price from $45 to $49.
  • Credit Suisse increased its target price from $40 to $41.
  • Piper Sandler increased its target price from $42 to $44.

Stock returns

Cisco stock fell 2.9% on Wednesday and ended the day at $41.95. At this closing price, the company’s market cap is $177.9 billion. The stock is trading 28.0% below its 52-week high of $58.26 and 29.5% above its 52-week low of $32.40.

Based on Cisco’s closing price on Wednesday, the stock was trading 0.4% below its 20-day moving average of $42.10. The company is trading 4.6% above its 50-day moving average of $40.12 and 3.6% below its 100-day moving average of $43.52. The stock’s 14-day relative strength index score of 51 indicates that the stock isn’t overbought or oversold.

Cisco’s lower, middle, and upper Bollinger Bands are $40.45, $42.10, and $43.75, respectively. The stock closed near its middle Bollinger Band level, which suggests that it isn’t overbought or oversold.

Cisco stock rose 2.6% in pre-market today at 5:51 AM ET. The S&P 500 futures fell 0.03%, while the Dow futures fell 0.1%. To learn more, read Goldman Sachs Warns about a US Stock Market Crash.


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