Trading Cisco Systems Post Q2 Earnings

February 20, 2023 20:51

Cisco Systems was founded in 1984 but is one of the leading companies in technology. In fact, it is one of the biggest companies in the telecommunications equipment market but has business operations in multiple sectors including networking products, software, security, infrastructure and more.  

In its latest fiscal second-quarter earnings report, Cisco surprised investors with its full-year guidance. Learn more about Cisco’s latest earnings results, what the analysts are forecasting for the stock and how to trade it.

Stock: Cisco Systems
Symbol for Invest.MT5 Account: CSCO
Date of Idea: 21 Feb 2023
Time Line: 1 - 6 months
Entry Level: $52.00
Target Level: $64.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

Past performance is not a reliable indicator of future results or future performance.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Cisco Q2 Earnings Report

Here are some of the key highlights from the latest fiscal second-quarter earnings report from Cisco: 

  • Earnings per share of 88 cents vs 86 cents per share expected 
  • Revenue of $13.59 billion vs $13.43 billion expected 
  • Total revenue growth was up 7% year over year 
  • Net income down 7% 
  • Secure Agile Networks division revenue of $6.75 billion up 14%, beating analyst expectations 
  • Webex revenue was down 10% and falling short of analyst expectations 
  • Guidance lifted for the 2023 fiscal year with 9% to 10.5% revenue growth 

Cisco posted better-than-expected results in both earnings per share and revenue figures. The networking company’s largest division is Secure Agile Networks which provides products for data centres. It posted $6.75 billion in revenue which was much higher than what analysts were expecting of $6.52 billion.  

However, the Internet for the Future unit posted revenue that was lower than analysts were expecting and down from the prior quarter. Revenue from its Webex product and service was down 10% and also fell short of analyst expectations.  

Investors were surprised by Cisco lifting its fiscal 2023 guidance. It is now forecasting 9% to 10.5% revenue growth and higher earnings per share which were both well ahead of analysts’ expectations. 

While the stock jumped initially on the increased guidance for the year, Cisco did state that its backlog for hardware and software has increased and is still very high compared to usual. This is down to issues with supply and could weigh on the stock’s revenue growth for the year and share price if not dealt with.

Cisco Stock Forecast - What do the Analysts Say?

According to analysts polled by TipRanks for a Cisco stock forecast in the past 3 months, there are currently 8 buys, 9 holds and 1 sell ratings on the stock. The highest price level for a Cisco stock forecast is $100.00 with the lowest price target at $46.00. 

The average price target for a Cisco stock forecast is $59.63.

Source: TipRanks, 21 Feb 2023


An Example Trading Idea for the Cisco Stock Price

An example trading idea for the Cisco share price could be as follows:  

  1. Buy the stock on a break above the post-earnings high at $52.00. 
  2. Target just below the 23-year high around $64.00. 
  3. Keep your risk small at a maximum of 5% of your total account.   
  4. Time Line = 1 – 6 months  
  5. If you buy 10 Cisco shares:  
  6. If target is reached = $120.00 potential profit ($64.00 - $52.00 * 10 shares).   

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering the fact the stock ended last year down more than 25%. 

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Cisco stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall. 

How to Buy Cisco Stock in 4 Steps  

With Admirals, you can buy shares in companies like Cisco with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level. 
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.


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Do You See the Cisco Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Cisco's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.