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PreMarket Prep Stock Of The Day: Cisco Systems

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PreMarket Prep Stock Of The Day: Cisco Systems

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Not all technology stocks are treated equally. While the major companies have led the market off the March lows, much of old tech has stumbled. Another example of this is the price action in Cisco Systems, Inc. (NASDAQ: CSCO), which is the PreMarket Prep Stock Of The Day.

All-Time Highs - What Are you Talking About? When looking at the long-term relative performance of Cicso since late 2000, it's horrible. Of course, it took many years for many technologies to recover and make new all-time highs, but Cisco hasn't even come close.

From its peak in September of 2000 at $69.63, the best it could do was reach $58.26 in July 2019 and now is quite some distance from that level.

Always Beats And Then Gets The Beats: Gong back to the first quarter of 2011, the company has beat for EPS in all but two quarters. It's similar for sales, with only one miss over the same period of time.

On a few occasions, the issue has rallied, but on most, it has been slammed, certainly not a good sign when it has met or exceeded estimates, which is reflected in its share price. The fickle finger of Wall Street always seems to find something it doesn't like in the report.

The Song Remains The Same: After the close on Wednesday, the company announced a fourth-quarter EPS beat of 6 cents along with a sales beat of $434 million. However, the Street is more focused on its lower guidance for Q1, which fell well shy of Street estimates, and sales to be down around 10% year over year.

After-Hours Price Action: Traders that chased the headline number got smoked as the issue immediately cleared the major resistance at the $48 area, reaching $48.50 and sharply reversing course. In a matter of minutes, it saw major step-down sellers to the $45 area. It ended the after-hours session at $44.99.

Price Action When Being Covered On The Show: When the issue was being discussed on the show, it was trading at $44.80. Co-host Dennis Dick lamented about having this “dog” in his portfolio, which the author of this article also owns.

"It is a perennial underperformed," Dick said. "I have it in my portfolio and I wish hadn't... Growth is not there [and] they are looking to cut expenses."

The author of this article mentioned it was not bouncing at all and the host agreed it could do what Intel did after its report.

Price Action In The Regular Session: It’s $4 lower open has turned to be pennies off the high for the session, which is $43.84. Sellers have engulfed the issue and the current low for the days stands at $42.38 as of 12 p.m. ET. If the decline continues, it's next level of support doesn't come in until the trio of daily lows at the $41 area from early May.

 

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