Networking giant Cisco Systems (CSCO) is up 6.5% in today’s pre-market trading session. The upside came after it reported better-than-expected Q4 results and provided revenue forecasts above analysts’ expectations. Besides for earnings, investors should note that the company revealed plans for a second wave of layoffs this year, targeting about 7% of its workforce. This follows a previous reduction of about 4,250 employees in February.
These job cuts are part of Cisco’s strategic shift towards higher-growth areas such as cybersecurity, cloud systems, and artificial intelligence (AI). To support this shift, Cisco announced plans to invest $1 billion in AI startups in June and also partnered with Nvidia (NVDA) to develop AI infrastructure solutions.
Analysts See Potential for Revenue Growth
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” bullish analysts expect AI infrastructure to drive networking growth and boost demand. Additionally, the analysts see room for revenue growth from new security offerings and synergies from the Splunk acquisition, completed in March.
At this point, it is worth highlighting that for Q1 FY25, Cisco expects to report revenues between $13.65 billion and $13.85 billion, higher than the $13.64 billion reported in fiscal Q4.
Is CSCO a Buy, Sell, or Hold?
Wall Street is cautiously optimistic about Cisco stock. It has a Moderate Buy consensus rating based on six Buy and nine Hold recommendations. Analysts’ average price target on CSCO stock of $56.08 implies 23.42% upside potential.
