Cisco (NASDAQ:CSCO) plans to restructure its operations, including cutting thousands of jobs, Reuters reported. While the exact magnitude of the layoffs is still under consideration by the network giant, an official announcement is expected to be made early this week in tandem with the company’s preparations for its Q2 earnings report.
Notably, the company will release its second quarter Fiscal year 2024 financial results on February 14, 2024.
Meanwhile, through the restructuring, Cisco aims to focus on high-growth sectors and reduce costs as it is witnessing a slowdown in new product orders. During the last earnings call, the company reduced its full-year revenue guidance and provided a lower-than-expected Fiscal 2024 EPS outlook. With this backdrop, let’s delve into Q2 expectations.
Cisco’s Q2 Sales and Earnings Could Decline
Wall Street expects Cisco to post revenue of $12.71 billion in Q2, down 6.5% year-over-year. Meanwhile, the company’s management expects to deliver revenue in the range of $12.6 billion to $12.8 billion. The year-over-year decline reflects an expected drop in product orders.
Analysts expect Cisco to post earnings of $0.84 per share in Q2, down from $0.88 in the prior-year quarter. Lower sales will likely hurt its bottom line.
Is Cisco a Buy, Sell, or Hold?
Cisco stock has gained nearly 8% in one year, underperforming the S&P 500’s (SPX) gain of 21.5%. Further, analysts remain sidelined on CSCO stock owing to the near-term challenges.
Cisco stock has three Buy and 13 Hold recommendations for a Hold consensus rating. Analysts’ average price target of $52.46 implies a limited upside potential of 4.65% from current levels.
