Cisco (CSCO) plans to report its third-quarter results after the market closes on May 14, with a conference call scheduled for 4:30 p.m. ET. What is worth paying attention to is:
guide: In addition to the last report, Cisco directed adjusted earnings per share of 90C-92C in the third quarter and revenue of 13.9b-$14.1b. At the time, analysts expected the company's revenue to be $13.88B, but those numbers have since risen to 92c and 14.06b.
Repurchase/Diployment: Cisco also announced in its last report that the company has announced a quarterly dividend of 41 degrees Celsius per share, an increase of 1 degree Celsius or 3% from the previous quarter's dividend, and will pay to all stockholders on April 23, 2025, and all stock shareholders will open on April 3, 2025. Cisco's board of directors also approved a $15B increase in authorization for the stock buyback program. There is no fixed termination date for the repo. The remaining fixed stock repurchase amount (including additional authorization) is approximately $17B.
Target Cutting: Several analysts have lowered Cisco's price targets in the weeks leading up to the company's third-quarter report. In early April, Piper Sandler analyst James Fish lowered the company's price target from $72 to $60 and maintained a neutral stock rating. Following its Q1 2025 clinical infrastructure inspection, the company is widely reducing its estimates and price targets throughout the space that imposes underlying macro pressure on sales cycle expansion. Piper is lowering new corporate and expansionary assumptions across the group, but the FX headwind is largely reversed.
The same week, Morgan Stanley analyst Meta Marshall lowered Cisco's price target from $68 to $65 and maintained an overweight rating on the stock. Analysts told investors that tariffs add more uncertainty to the online spending market, while demand intentions are “strong but weakening.” The breadth of the tariff was announced on April 2 with “little hidden space,” challenging profit margins, demand or both, with analysts adding in the notes for the telecom and network equipment group.
Citi also lowered its company's price target for Cisco from $73 to $68 and lowered its stock's buy rating. The company expects North American Communications Equipment Group to announce over the weekend's reciprocal tariff exemption at North American Communications Equipment Group. That said, Citi lowered its data center capital expenditure and PC model to reflect “macro-induced” weak demand. The company prefers AI servers to expose stocks to businesses, saying many companies maintain a fixed IT budget and are reluctant to raise capital expenditures in response to price increases. Analysts expect consumer segments to see lower inflation and demand.
Meanwhile, JPMorgan analyst Samik Chatterjee lowered Cisco's price target from $73 to $70 and reiterated its overweight rating on the stock. The company updated its hardware and network model to reflect its best view on the second-order impact of current macro uncertainty, which is a tariff caused by that macro uncertainty. JPMorgan now moderately embeds the macro slowdown and related demands of most customer verticals into its estimates. Analysts expect a macro slowdown to lead to lower demand for consumers, as well as businesses and telecom customers.
Additionally, Rosenblatt analyst Mike Genovese lowered the company's price target from $80 to $63 and lowered the stock's buy rating. The company believes that the March quarter results for the field of optics will be "average". However, analysts told investors that none of these companies are immune to the negative impact on gross margins of higher tariffs or meaningful macro slowdowns. As a result, Rosenblatt reduced its coverage by 19%.
Better: In late March, Melius research analyst Ben Reitzes reiterated the buy rating and the $79 Cisco stock target target, highlighting three reasons for the stock that “the story could quickly spread to you in CY25.” The company cites a series of deals with NVIDIA (NVDA), which believes Cisco "to the right of AI in the enterprise is the lens of AI" and the main campus switch refresh for the second half of the 2025 calendar, which says "the Bode of the pick-up order should be picked up in the online order." Additionally, the security strategy is "final holding", which the company believes could help multiple. "In short, Cisco's price is a good price, probably in the early stages of raising a parent," the analyst told investors.
AI/Middle East: This week, Cisco announced a series of strategic plans at all stages of the AI revolution in the United States and the Middle East. The company said the new initiatives place Cisco at the center of the Bay AI revolution and provide world-class technology with other Cisco Partners. This morning, CEO Chuck Robbins visited Saudi Arabia, the UAE, Qatar and Bahrain, today’s visit and Bahrain today, with EVP and chief product officer Jeetu Patel traveling to Saudi Arabia where he participated in President Trump’s State Department visit to the region. Cisco said it will work with the AI Infrastructure Partnership, led by BlackRock (BLK), a global infrastructure partner, MGX, Microsoft (MSFT), NVIDIA and XAI. AIP will initially seek to unlock $300,000 in capital from investors, asset owners and companies. Cisco's addition as a technology partner for AIP further strengthens the AIP platform as it attempts to invest in secure, efficient and scalable infrastructure to support AI workloads. Cisco also announced it will join a groundbreaking initiative with Saudi Arabia’s new AI enterprise Humain to help build the world’s most open, scalable, resilient and cost-effective AI infrastructure. In addition, Cisco will expand its strategic partnership with the G42 to further advance AI innovation and infrastructure development in the UAE. The collaboration highlights Cisco's comprehensive security AI portfolio and AI-Native Solutions and Services as well as the deep regional roots of G42, AI infrastructure expertise, and expands the global footprint including potential joint market entry programs. The Qatar Ministry of Interior and Cisco signed a letter of intent to collaborate on Qatar's digital transformation, artificial intelligence, infrastructure development and cybersecurity.
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