Cisco Systems Inc is set to report its Q3 FY’24 results, with an expected revenue of $12.8 billion and earnings of $0.84 per share. The company has been facing challenges in product sales due to customers focusing on deploying purchased inventory. Large companies have also been holding back on networking spending, impacting growth. However, Cisco has seen growth in service sales and software subscriptions. The company has been improving its margins through cost management and a shift to a recurring revenue model with software subscriptions. CSCO stock has seen some gains but has underperformed the S&P 500 in recent years.
Despite underperforming the S&P 500 in 2022 and 2023, CSCO stock is considered somewhat undervalued, trading at about 14x consensus earnings for FY’24. Cisco’s push into the recurring revenue model and focus on cybersecurity could drive growth. The company is also expected to perform better than its big tech peers in the event of an economic downturn due to secular spending trends on digitization and networking. Analysts value CSCO stock at about $55 per share, 15% ahead of the current market price. Cisco’s revenue streams and valuation are further analyzed in Trefis’ reports for a closer look at the company’s potential growth.
Cisco’s revenue for Q3 is expected to be impacted by a slowdown in product sales, as customers focus on implementing previously purchased products. Large companies have been holding back on networking spending, and competition from smaller networking companies is impacting growth. While product revenue declined in Q2 FY’24, Cisco has seen growth in service sales and software subscriptions. The company’s margins have improved in recent quarters due to lower costs and a shift to a recurring revenue model with software subscriptions.
CSCO stock has had inconsistent returns in recent years, underperforming the S&P 500 in 2022 and 2023. The stock is considered somewhat undervalued, trading at about 14x consensus earnings for FY’24. Cisco’s push into the recurring revenue model and focus on cybersecurity could help drive growth. Analysts value CSCO stock at about $55 per share, 15% ahead of the current market price. The company is expected to perform better than its big tech peers in the event of an economic downturn, given the ongoing digitization and networking trends.
CSCO stock has seen some gains but has underperformed the S&P 500 in recent years. Analysts value the stock at about $55 per share, 15% higher than the current market price. Cisco’s revenue streams and valuation are further analyzed in Trefis’ reports for a detailed look at the potential growth drivers for the company. Despite challenges in product sales and competition from smaller companies, Cisco’s shift to a recurring revenue model and focus on cybersecurity could drive future growth. The company is expected to perform better than its big tech peers in the event of an economic downturn due to ongoing spending trends on digitization and networking.
