5 Cisco Analysts On Earnings Beat: Results 'Good' But There's A Worrisome Trend

While Cisco Systems Inc CSCO Wednesday reported a beat and raise quarter, it’s worth looking at its current and long-term debt.

Analyst Meta Marshall maintained an Equal-Weight rating and price target of $48.
“CSCO posted FQ1 upside as supply chain loosened, allowing some backlog to be fulfilled,” Marshall said in a note. "Product orders were slightly better than expected, but seeing some areas of more caution."
“Defensive call playing out as backlog insulates EPS, but uncertain macro and slowing orders to keep multiple suppressed,” the analyst added.

Analyst Simon Leopold reiterated an Outperform rating and price target of $59.
“We had thought Cisco could beat and raise as it did; we did not envision the increase to the FY23 forecast,” Leopold wrote in a note.
“Despite incremental cautiousness regarding Europe because of elevated energy costs and Forex, continued strong demand and an improving supply chain contributed to the improved fiscal outlook,” he added.

Analyst Mike Genovese maintained a Neutral rating and price target of $51.
“Supply is still coming at a high price as 1Q GMs of 63.0% missed by 50bps and the 2Q guidance of 63.0%-64.0% was short a similar amount,” Genovese said.
“The primary factors behind the lower GMs are component broker expedite fees, freight and logistics expenses, and higher mix of revenues from backlog at prior lower prices,” the analyst wrote. “While reported results were good, order trends were more worrisome."

Analyst Thomas Blakey reiterated a Sector Weight rating on the stock.
“Cisco posted improved results as supply chain constraints eased and company product redesigns enabled the Company to ship more product including high-margin software, with subscription software growing 11% in F1Q23 driven mainly by net new customers as Cisco is yet to anniversary meaningful upsells related to renewals,” Blakey wrote.
“Backlog remains elevated at 2-3x normal levels (i.e., $4B-$5B),” he further mentioned.

Analyst Erik Suppiger reaffirmed a Market Perform rating.
“While Cisco beat the F1Q23 consensus estimates and guided slightly above the consensus estimates, the performance in the quarter materially benefited from an improved supply chain that enabled Cisco to ship orders that had been held in backlog,” Suppiger stated.
“The reduction in backlog reduces investor visibility into underlying demand trends, but we believe demand is mixed as Cisco’s overall orders declined 14% Y/Y and management noted orders fell short of normal sequential growth by 1%,” the analyst further mentioned.

CSCO Price Action: Shares of Cisco Systems had risen by 3.33% to $45.87 at the time of publication Thursday.

Earnings Calendar