Cisco Earnings & Guidance Face Fiscal Cliff Risks

Cisco Systems, Inc. (NASDAQ: CSCO) is set to report earnings this week on Tuesday after the close of trading. One has to wonder just how good this earnings can be. This earnings report will mark its first quarter of its fiscal 2013.

Thomson Reuters has estimates of $0.46 EPS and $11.79 billion in revenue. With the coming fiscal cliff impacting government spending by so much, we expect Cisco to offer a wider range for its guidance ahead and we also expect that many caveats will be included along the lines of how unpredictable the spending cuts may be on equipment. Thomson Reuters has estimates for the second quarter ending in January 2013 as $0.48 EPS and $12.07 billion in revenue.

One issue that is bringing some serious caution is a downgrade from J.P. Morgan. This came out as recently as last Friday as its rating was cut to Neutral from Overweight. With shares up over 1% on Monday, the $17.05 price compares to a 52-week range of $14.96 to $21.30. We have also seen some growing caution from RBC and MKM Partners without any formal ratings changes. The consensus price target from Thomson Reuters is currently at $21.61 but we would be quick to point out that this mean target is above its 52-week high.

On the charts it needs to be addressed that Cisco's 50-day moving average is $18.41 and the 200-day moving average is $18.24. Those figures should adjust slightly on Tuesday, but the chart also shows some serious overhang around the $18.00 mark.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Earnings, Technology, Technology Companies Tagged: CSCO