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Cisco Stock Awaits Earnings Report Amid Supply Chain Worries 


Amid worries over supply chain constraints impacting its hardware business, Cisco Systems (CSCO) reports fiscal fourth-quarter earnings after the market close on Wednesday. Cisco stock likely will move on guidance.




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Based on earlier earnings reports from rivals Arista Networks (ANET) and Juniper Networks (JNPR), analysts expect Cisco earnings to come in ahead of views. Wall Street is calling for product demand to continue improving as the economy reopens.

Analysts estimate that Cisco earnings on an adjusted basis in the July quarter will grow 3% to 83 cents a share. Revenue will climb 7% to $13.04 billion, analysts estimate.

For its current fiscal first quarter, analysts expect profit of 81 cents on revenue of $12.83 billion, up 7.5%. The reporting period ends in October.

Supply chain constraints persist creating some product shortages, Cisco stock analyst Simon Leopold of Raymond James said in a report to clients. He added that Cisco should be able to pass on higher costs to many government and corporate customers.

But Leopold added: “We suspect that (telecom) service providers and web-scale customers (are resisting) price increases.”

Cisco Stock: Margins Dip But Orders Increase

Cisco gross margins dipped in the April quarter amid supply chain constraints caused by global chip shortages. But orders increased 10%, Barclays analyst Tim Long said in his note to clients. That’s the highest rate since Cisco’s fiscal first quarter in 2012.

Cisco plans to hold its first analyst day in a few years on Sept. 15.

Cisco stock fell nearly 1% to 55.46 in midday trading on the stock market today. Also, CSCO stock has gained 25% in 2021.

Heading into the Cisco earnings report, the company owned a Relative Strength Rating of 78 out of a best-possible 99, according to IBD Stock Checkup.

From a technical view, CSCO stock trades in a 5% buy zone from an entry point of 55.45, according to IBD MarketSmith analysis.

In addition, Cisco stock has shifted away from its core business of selling network switches and routers. With acquisitions, Cisco has aimed to increase revenue from software and services.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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