Shares of networking titan Cisco Systems (NASDAQ:CSCO) surged in after-hours trading after it reported strong third-quarter results. The company beat analyst expectations with adjusted earnings per share of $0.88 on revenue of $12.7 billion. Although revenue surpassed expectations, it still fell almost 13% on a year-over-year basis.
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Nevertheless, CFO Scott Herren noted that demand is starting to stabilize as the equipment that was shipped in previous quarters gets used up. He also pointed to the company’s recent acquisition of Splunk as a catalyst for future growth.
As a result, the company raised its guidance. For Fiscal Year 2024, Cisco anticipates a revenue range of $53.6 billion to $53.8 billion, which edged out the consensus estimate of $53.54 billion. Furthermore, full-year adjusted earnings are expected to land between $3.69 to $3.71 per share, also above the consensus of $3.64 per share.
Cisco Returns $2.9B to Shareholders
During the third quarter, Cisco returned over $2.9 billion to shareholders. Dividends made up $1.6 billion, or $0.40 per share, while buybacks made up the remaining $1.3 billion. The firm regularly repurchases its shares each quarter (as demonstrated in the image below) and has $7.2 billion remaining under its buyback plan.
Is CSCO a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on CSCO stock based on two Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 9% rally in its share price over the past year, the average CSCO price target of $52.89 per share implies 6.48% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
