Cisco Systems, Inc. (NASDAQ: CSCO) shares have weakened more than 9% after the company reported financial results for the first fiscal quarter. Total revenue has increased below expectations, but the earnings per share were higher than expected.
Wells Fargo has a positive view of Cisco
Cisco Systems reported financial results for the first fiscal quarter this Wednesday; total revenue has increased by 8.1% Y/Y to $12.9 billion, slightly below expectations, while the GAAP earnings per share were $0.70 (beats by $0.03).
Cisco Systems’s business continues to perform well, and the company’s momentum during the fourth quarter continued through the first fiscal quarter. Chuck Robbins, Chair and CEO of Cisco, added:
We had robust growth and continued strong demand in the first fiscal quarter despite the very dynamic supply environment. Our breakthrough innovation, strong demand, and the success of our business transformation position us well for another year of growth in fiscal 2022.
Cisco Systems updated financial guidance for the second fiscal quarter of 2022 and expects 4.5% to 6.5% growth in revenues, while the GAAP EPS should be between $0.64 to $0.68.
For the 2022 fiscal year, Cisco expects revenue growth to be in the range of 5% to 7% compared with the 2021 fiscal year, while the non-GAAP EPS should be in a range from $2.77 to $2.89.
Despite this, Cisco’s sales forecast frustrated some investors who want to see more consistency. Shares of Cisco remain under pressure, but according to Wells Fargo, the current dip provides a buying opportunity.
Wells Fargo has an Overweight rating on Cisco with a price target of $70, implying more than 30% upside compared to the current share price. Evercore assigned a $67 price target on Cisco and reported that the bull case remains intact for the patient investor.
Research company Jefferies also has a buy rating with a $65 target, while Piper Sandler said that Cisco’s sales forecast is cause for concern, but lead metrics are still positive.
Fundamentally looking, Cisco trades at around sixteen times TTM EBITDA, and with a market capitalization of $240 billion, shares of this company are reasonably valued.
$50 represents the strong support
Cisco Systems shares fell more than 8% since the beginning of the week, and for now, bears remain in control of the price action.
Data source: tradingview.com
Falling below $50 supports the negative trend, and the next price target could be at $45.
On the other side, if the price jumps above $60, it would signal to trade Cisco shares, and we have the open way to $65.
Summary
Cisco Systems reported solid first-quarter results this Wednesday, and the company’s management said that strong demand and the success of business transformation positions Cisco well for another year of growth in fiscal 2022. Despite this, Cisco’s sales forecast frustrated some investors who wanted to see more consistency, and shares of this company fell more than 8% since the beginning of the week.
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