Trading Strategies For Cisco Systems Stock Before And After Q3 Earnings

Cisco Systems, Inc CSCO was trading slightly higher on Wednesday, pushing up above the 200-day simple moving average (SMA), which the stock regained as support on Monday. The company is set to print its third-quarter financial results after the markets close.

Analysts expect the software and communications company to report EPS of 97 cents on revenues of $14.39 billion for the quarter ending March 31.

On March 17, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on Cisco and maintained a $73 price target. The price target suggests about 53% upside for the stock.

When Cisco printed its second-quarter earnings report on Feb 15, the stock rallied about 5.24% the following day before giving all the gains back over the subsequent five days.

For that quarter, Cisco reported earnings of 88 cents per share, beating a Street estimate for EPS of 85 cents. The company posted a top-line beat, reporting revenues of $13.592 billion compared to the $13.43-million consensus estimate.

From a technical perspective, Cisco looks bullish heading into the event, having settled into an uptrend on the daily chart. Of course, holding a position in a stock over earnings can be akin to gambling, as stocks can rise following an earnings miss and fall after reporting a beat.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Cisco Chart: Cisco reversed into an uptrend on May 4 and has printed a consistent series of higher highs and higher lows. The stock’s most recent higher high was formed on May 10 at $46.93 and the most recent higher low was printed at the $46.20 mark the day after.

On Wednesday, Cisco bumped up into and rejected from the lower range of a gap that exsits between $47.65 and $47.99, which was left behind on April 20. If the stock receives a bullish reaction to its earnings print, the empty trading range is likely to fill and Cisco may find resistance at the top of the gap.
If Cisco suffers a bearish reaction to its earnings and fall back under the 200-day SMA, the uptrend may negate and a downtrend could be on the horizon.
Cisco has resistance above at $47.96 and $49.21 and support below at $46.69 and $45.67.