Cisco sees revenue increasing by between 9% and 10.5% for its current fiscal year.
Carlos Costa/AFP via Getty Images
Cisco
stock rose on Thursday after its second-quarter earnings. The networking-equipment provider is benefiting from a rare position among technology companies, enabling it to look past macroeconomic conditions.
While other tech companies are warning of waning customer demand,
Cisco
(ticker: CSCO) is expecting strong growth as supply-chain obstructions ease and it can whittle down the backlog of orders from the height of the Covid-19 pandemic. It’s also set to benefit from spending on cloud infrastructure.
“We think CSCO [Cisco] sounded less concerned about macro-related softness vs. large-cap tech peers as they see the secular need to invest in networking far outweighs the macro concerns,” said analysts at Evercore ISI.
Evercore analysts raised their target price on Cisco shares to $60 from $58 and reiterated an Outperform rating.
Shares of Cisco were up more than 4% in premarket trading on Thursday to $50.45.
Cisco projected revenue growth of between 11% and 13% for its fiscal third quarter from the same period the prior year, accelerating from 7% in the second quarter. For the fiscal year ending in July, Cisco sees revenue increasing between 9% and 10.5%.
“In our customer markets, we experienced normal double-digit sequential growth in both our enterprise and commercial markets, while [the] public sector performed better than we have seen historically,” CEO Chuck Robbins told analysts on an earnings call on Wednesday. “Within our service provider business, our order rate was below recent sequentials as some customers are absorbing the improved delivery of our products.”
Cisco isn’t the only networking-equipment company to have struck a positive tone with its earnings.
Arista Networks
(ANET) earlier this week posted adjusted fourth-quarter earnings and sales that beat Wall Street estimates. However, analysts at
UBS
warned that one of Arista’s key customers,
Facebook
-owner Meta (META), could soon slow its spending.
Write to Adam Clark at adam.clark@barrons.com
Credit: marketwatch.com