Networking equipment company Cisco Systems (NASDAQ:CSCO) tumbled in pre-market trading after its soft guidance left Wall Street analysts disappointed.
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The company lowered its FY24 guidance and now anticipates revenues to land between $53.8 billion and $55.0 billion. For reference, its prior forecast was in the range of $57 billion to $58.2 billion. In addition, analysts were expecting revenues of $57.89 billion.
Furthermore, it has forecasted FY24 earnings to be in the range of $3.87 to $3.93 per share, below the $4.05 per share estimate.
Top-rated Bank of America analyst Tal Liani remained sidelined on the stock with a Hold rating and a price target of $55, implying an upside potential of 3.2% at current levels. The analyst pointed out that the unsustainable drawdown of the strong backlog in Fiscal Year 2023 led to a 20% decline in product orders, resulting in a $3.2 billion reduction in revenue.
Liani added that he doesn’t believe the drop in product orders is due to rising competition. Instead, he thinks orders are “reverting to the mean, following the 17.4% and 20.3% product revenue growth in 3Q23 and 4Q23, respectively.”
Is CSCO a Buy or Sell?
Analysts remained sidelined about CSCO stock with a Hold consensus rating based on five Buys and 15 Holds. CSCO stock has rallied by more than 14% year-to-date and the average CSCO price target of $53.93 implies an upside potential of 1.2% at current levels.
