Will Cisco Earnings Mark The Start Of A Multi-Quarter Recovery?

Shares of Cisco Systems, Inc. (NASDAQ: CSCO) are slightly up on Wednesday afternoon, as the company prepares to report its third quarter financial results after the market closes.

Several major Wall Street research firms have weighed in on the results ahead of the announcement.

Pacific Crest – Overweight rating, $36 Price Target

The analysts at Pacific Crest point out April as a quarter that could mark the start of a “multiquarter recovery driven by new product cycles across switching, routing, wireless and servers.” Assuming that “improving fundamentals and cloud momentum can justify earnings and multiple expansion” in the second half of the year and into 2016, they have upgraded the stock to Overweight.

Estimates were also raised.

The firm now expects earnings of $0.53 per share on revenue of $12.089 billion, pretty much in line with the crowd’s estimate of $0.54 per share on revenue of $12.121 billion, the Street’s consensus of $0.53 per share on revenue of $12.047 billion, and the company’s guidance of $0.52 per share on revenue of $12.007 billion.

Related Link: Cisco Earnings Preview: Will Strong Execution Drive Results?

These figures compare to earnings of $0.51 and revenue of $11.545 billion, reported in the same quarter last year, and EPS of $0.52 on revenue of $11.936 registered in the last quarter.  

William Blair – Outperform rating, no price target

Analysts at William Blair also seem quite bullish on Cisco, which they continue to select as their top large-cap pick.

According to a recent report, “Recent discussions with enterprise resellers across North America and Europe point to relative strength in spending on Cisco gear, driven by UCS share gains, product refreshes across multiple product categories (against an aging installed base), competitive momentum for Meraki, and easy comparisons versus last year.”

Although the experts recognize a certain level of pressure on international demand derived from the strong US dollar, they believe the company is well positioned to either meet or beat consensus estimates this quarter.

They anticipate revenue growth of 4 percent year-over-year and earnings of $0.53 per share, in line with consensus.