Wall Street sees Q4 EPS 74c, revenue $12.08B for Cisco
Cisco (CSCO) is scheduled to report results of its fiscal fourth quarter after the market close on Wednesday, August 12, with a conference call scheduled for 4:30 pm ET. What to watch for:
1. Q4 EPS CONSENSUS HIGHER: Along with its last report, Cisco guided for Q4 adjusted earnings per share in the range of 72c-74c on a year-over-year revenue decline of 8.5%-11.5%. At the time, analysts were expecting the company to report Q4 EPS of 71c on revenue of $12.07B, but those estimates have since risen to 74c and $12.08B, respectively.
2. THOUSANDEYES: In late May, Cisco confirmed its intent to acquire privately held ThousandEyes. ThousandEyes' Internet and Cloud intelligence platform delivers deep visibility and insights into the digital delivery of applications and services over the Internet, Cisco said at the time. "I'm excited to welcome the ThousandEyes team to Cisco," said Todd Nightingale, senior vice president and general manager, Cisco Enterprise Networking and Cloud. "The combination of Cisco and ThousandEyes will enable deeper and broader visibility to pin-point deficiencies and improve the network and application performance across all networks. This will give customers end-to-end visibility when accessing cloud applications, and Internet Intelligence will improve networking reliability and the overall application experience." Though Cisco did not disclose financial terms, Bloomberg's Liana Baker said at the time that the value of the transaction was close to $1B.
3. ACACIA: Late last month, Cisco and Acacia Communications (ACIA) issued a joint statement on the status of the ongoing regulatory review for Cisco's proposed takeover of Acacia that is being conducted by the State Administration for Market Regulation of the People's Republic of China, or SAMR. The companies at the time said they were still actively engaged with SAMR and expect the acquisition to receive regulatory clearance. Meanwhile, in early August, Dealreporter said that Cisco had been holding remedy discussions with China's antitrust regulator regarding the Acacia deal, and the talks are being close to finalized.
4. JPMORGAN DOWNGRADE: In mid-July, JPMorgan analyst Samik Chatterjee downgraded Cisco to Neutral from Overweight, saying he expects "limited investor enthusiasm" for the shares in the absence of visibility into a return to revenue growth amidst continuing headwinds to enterprise spending in the backdrop of an uncertain macro. The analyst added that a rebound in Enterprise spending is largely going to lag the recovery in consumer spending, "which positions other companies in our coverage for relatively higher upside."
5. MS UPGRADE: A week before that downgrade, Morgan Stanley analyst Meta Marshall upgraded the stock to Overweight from Equal Weight, saying that the stock's multiple discount to the S&P was at 10-year highs despite the company's durable earnings growth. The analyst at the time added that the multiple discount to the S&P has grown to over seven times, but Marshall thinks the gap should close to "a more normal" three to four times as Cisco's earnings prove more resilient than investors expect.