Cisco Systems(CSCO) released better-than-expected financial revenue forecasts for 2023 sending CSCO stock higher on Thursday.
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Amid lower expectations, Cisco’s financial fourth-quarter results for 2022 beat Wall Street estimates. Cisco stock jumped 4.9% to 48.95 in premarket trading on stock market today.
The computer networking giant announced its July quarter earnings after the market closed on Wednesday. The report encouraged analysts, although they expressed some caution.
“Cisco’s fiscal first-quarter and full-year 2023 revenue guidance was above the street, although gross margin continues to be impacted by components and logistics,” Barclays analyst Tim Long said in a note to clients.
CSCO Stock: Product Orders Rejected
Long continued, “Management has continued to see strong demand, record annual recurring revenue, and sees supply chain stresses easing in FY2023. Gross forward margin is trending lower but may be conservative due to price hikes taking effect. Cisco sees no signs Large order cancellations or slowdowns in demand.”
CSCO’s adjusted earnings per share were 83 cents per share, down 1% from the prior year. Revenue was flat at $13.1 billion, including acquisitions.
Analysts estimated Cisco would earn 82 cents per share on revenue of $12.73 billion, according to FactSet.
“While product orders are down 6% year-over-year (compared to a hardship compared to 31% growth a year ago), the sequential 15% growth in product orders indicates continued perpetual demand,” Credit Suisse analyst Sami Badri said in a note. .
Cisco Stock: 2023 Sales Guidance Above
For the current fiscal first quarter ending in October, Cisco forecast earnings of 82 cents to 84 cents versus estimates of 84 cents. Cisco forecast revenue growth of 2% to 4%, compared to expectations of steady sales growth.
For fiscal year 2023, Cisco said it expects sales growth in the 4% to 6% range versus estimates of 3% sales growth to $52.7 billion.
Heading to Cisco’s earnings report, the company has a relative strength rating of 26 out of the top 99 possible, according to IBD stock check. CSCO’s stock is down 26% in 2022.
Additionally, CSCO’s stock has shifted away from its core business of selling network adapters and routers. Through acquisitions, Cisco aims to increase revenue from software and services.
But Cisco’s focus in subscription software revenue has stalled. Raymond James’ report said software has been hovering around 30% of total revenue for the past six quarters.
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