Here’s what Wall Street experts are saying about Cisco ahead of earnings

Cisco (CSCO) is scheduled to report results of its fiscal second quarter after the market closes on February 14 with a conference call scheduled for 4:30 pm ET. What to watch for:

Click here to check out Cisco’s recent Media Buzz Sentiment as measured by TipRanks.

GUIDANCE: Along with its last report, Cisco guided for Q2 adjusted earnings per share of 82c-84c on revenue of $12.6B-$12.8B. At the time, analysts were expecting the company to report Q2 EPS of 99c on revenue of $14.19B, but those figures have since fallen to 84c and $12.71B, respectively. In addition, Cisco in its last report cut its FY24 adjusted EPS view to $3.87-$3.93 from $4.01-$4.07 and lowered its revenue view for the year to $53.8B-$55B from $57B-$58.2B. At the time, analysts were expecting the company to report FY24 EPS of $4.05 on revenue of $57.76B, but those figures have since fallen to $3.86 and $54.26B, respectively.

Following the Q1 report, no fewer than six firms cut their price targets on the stock, including Deutsche Bank, Barclays, Piper Sandler, and BofA. In particular, Deutsche Bank said it expected Cisco shares to come under pressure following the “disappointing” order trends that drove a cut to the firm’s fiscal 2024 estimates, while BofA said the focal point of the report was “weak” Q2 and FY24 guidance driven by a slowdown of product orders. Meanwhile, DZ Bank and New Street downgraded Cisco after its Q1 report to Neutral-equivalent ratings, with New Street analyst Pierre Ferragu arguing that weak orders “make for a risky near-term outlook.”

PIPER CUTS PT: In mid-January, Piper Sandler analyst James Fish raised the firm’s price target on Cisco to $52 from $50 and maintained a Neutral rating on the shares. The firm’s estimates do not include the pending Splunk (SPLK) acquisition. Piper also noted at the time that it continues to prefer more earnings resilient names in the space with reasonable valuations and catalysts within Infrastructure.

MELIUS DOWNGRADE: In early January, Melius Research downgraded Cisco to Hold from Buy with a price target of $55, down from $60. The firm believes Generative AI is poised to deliver its “Halo Effect” on IT spending, starting in 2024, and also believes that outperformers from 2023 can continue. However, Cisco “seems like it is still finding its way in terms of AI customers” and managing the predictability of its own business as customers digest purchases, the analyst told investors.

JOB CUTS: Cisco is planning to restructure its business to focus on high-growth areas, which will include laying off “thousands of employees,” three sources familiar with the matter told Reuters‘ Utkarsh Shetti and Supantha Mukherjee last week. The company has a total employee count of 84,900 as of fiscal 2023 and is still deciding on the total number of employees to be affected by the layoffs, the report said.