Send me real-time posts from this site at my email
Zacks

Cisco (CSCO) to Report Q4 Earnings: Security & Webex in Focus

Cisco Systems, Inc. CSCO is slated to report fourth-quarter fiscal 2020 results on Aug 12.

The company’s results are likely to reflect gains from solid uptake of network security solutions, triggered by coronavirus crisis induced Internet traffic growth led by work-from-home and stay-at-home wave. Moreover, robust adoption of Webex on growing clout of video conferencing remains noteworthy.

Click here to know how Cisco’s overall fiscal fourth-quarter performance is expected to be.

Robust Security Portfolio: A Key Catalyst

Strong momentum witnessed by web security, unified threat, network security and advanced threat solutions in the fiscal third quarter is likely to have sustained in the quarter to be reported, primarily driven by growth in Internet traffic, and rising spend on cybersecurity as employees work remotely amid the lockdowns.

The company’s expanded family of cloud security solutions and differentiated end-to-end approach that helps in securing identity, endpoints and the network might have expanded customer base in the fiscal fourth quarter, primarily driven by rising security headwinds faced by enterprises globally.

Also, robust adoption of cloud-based solutions, including Duo and Umbrella, bodes well. The Zacks Consensus Estimate for Security is pegged at $796 million, indicating an improvement of 11.5% from the year-ago quarter.

Solid security growth is expected to instill investor optimism in the stock in the days ahead. On a year-to-date basis, shares of Cisco have declined 1.1% compared with the industry’s decline of 1.2%.



Cisco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strength in Webex Solutions Deserve a Special Mention

Cisco’s Applications segment’s fiscal fourth-quarter results are expected to reflect gains from solid uptake of enterprise collaboration offerings including Webex Meetings, Webex Devices and Webex Teams.

Coronavirus crisis led work-from-home wave has triggered demand for teleconferencing, workspace collaboration and telehealth services. This, in turn, may have bolstered the adoption of Cisco’s Webex solutions in the quarter to be reported.

Markedly, Cisco updates its Webex portfolio on a monthly basis to aid users enhance productivity with advancements in video conferencing. This integration of AI and ML capabilities aimed at improving engagement is expected to have further increased adoption of Webex services in the to-be-reported quarter. This is expected to have aided the company strengthen competitive position in the enterprise communication market against Microsoft’s MSFT Teams, Slack WORK and Zoom Video Communications.

During the quarter under review, the company launched a portfolio of business resiliency solutions to aid enterprises boost workforce and workplace productivity.
 

Cisco Systems, Inc. Revenue (Quarterly)

Cisco Systems, Inc. revenue-quarterly | Cisco Systems, Inc. Quote

The company also unveiled solutions focused on distance learning, and telehealth services, in a bid to capitalize on the growing clout of web-based learning and healthcare trends. The Zacks Consensus Estimate for Applications revenues is pegged at $1.509 billion, suggesting growth of 1.5% from the year-ago reported figure.

Other Factors to Consider

Growing clout of the company’s Meraki solutions, and campus switches including Cat9K and Nexus 9K, are likely to have benefited Infrastructure Platforms segment’s performance in the fiscal fourth quarter.

Further, in data-center vertical, momentum in the HyperFlex data-center solution driven by coronavirus induced demand for Internet and cloud computing solutions might get reflected in the to-be-reported quarter’s results.

Nevertheless, increasing investments on product enhancements and acquisitions amid stiff competition from Arista ANET and Juniper in networking infrastructure market may have limited margin expansion in the fiscal fourth quarter.

Besides, decline in IT spending and coronavirus pandemic-induced broader macroeconomic weakness across small and medium sized businesses is likely to have affected the fiscal fourth-quarter performance.

The Zacks Consensus Estimate for Infrastructure Platforms revenues stands at $7.467 billion, suggesting a decline of 5.2% from the year-ago reported figure.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Cisco Systems, Inc. (CSCO): Free Stock Analysis Report
 
Arista Networks, Inc. (ANET): Free Stock Analysis Report
 
Slack Technologies, Inc. (WORK): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue