Can Demand Momentum Drive An Earnings Beat For Cisco?

by Trefis Team
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Cisco (NASDAQ:CSCO) reports its Q2 on Feb 13. Not only did the company’s Q1 beat market expectations but we also expect Cisco’s demand momentum to help company register another beat. In addition to commentary around IT spending trends and U.S.-China trade war impact, we will be looking for color around the $660 million Luxtera acquisition.

Our interactive dashboard on Cisco’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

What To Watch For

Cisco had guided for a 5-7% revenue growth rate (y-o-y) for Q2. The company’s performance in infrastructure platforms on the back of increasing data consumption is likely to continue; of particular importance will be the commentary around routing. Given AppDynamics has been expanding its product reach, application revenue growth could see further strength. With Luxtera, we will also be expecting to hear some early thoughts around traction in the security business.

Luxtera is an integrated-optics company that Cisco acquired with plans of integrating Luxtera’s technology across Cisco’s intent-based networking portfolio (enterprise, data center and service provider markets), which could potentially bring Cisco in more direct competition with Applied Optoelectronics and Finisar.

We will also be listening in for any color on how the transition to a more software-oriented business and acquisitions can potentially hedge the company’s growth against broader macro trends and a generally weaker IT spending environment.

Do not agree with our forecast? Create your own price forecast for Cisco by changing the base inputs (blue dots) on our interactive dashboard.

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