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Cisco Beats on Q1 Earnings, Issues Weak View: ETFs in Focus

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Tech prime Cisco Systems (CSCO - Free Report) failed to cheer investors following first-quarter fiscal 2022 results. Though the networking giant beat on both earnings and revenues, it issued a downbeat revenue guidance for the ongoing quarter.

A lower-than-expected revenue forecast has pushed shares of CSCO down by as much as 8% in after-market hours. The dismal trading put ETFs with the largest allocation to this network giant in focus. Investors should closely monitor the movement of these funds — iShares U.S. Telecommunications ETF (IYZ - Free Report) , iShares North American Tech-Multimedia Networking ETF (IGN - Free Report) , and First Trust Nasdaq Cybersecurity ETF (CIBR - Free Report) — and grab the opportunity whenever it arises.

Cisco Earnings in Focus

Earnings of 82 cents per share outpaced the Zacks Consensus Estimate by a penny and improved 8% from the year-ago earnings. Revenues grew 8% year over year to $12.9 billion and surpassed the consensus mark of $12.98 billion (see: all the Technology ETFs here).

Cisco expects revenues to increase 4.5-6.5% year over year, and earnings per share in the range of 80-82 cents for second-quarter fiscal 2022. The Zacks Consensus Estimate for earnings per share is 81 cents while the same for revenues indicates growth of 6.9%. For the fiscal year, revenues are expected to grow 5-7% year over year while earnings per share are projected to rise in the range of $3.38-$3.45. The Zacks Consensus Estimate for earnings per share is $3.43 while the same for revenues indicates growth of 6%.

Cisco warns that supply chain issues will continue to weigh, driving up the component costs in the ongoing quarter. However, price increases will boost results in the third and fourth quarters.

ETFs in Details

iShares U.S. Telecommunications ETF

iShares U.S. Telecommunications ETF offers exposure to U.S. companies that provide telephone and internet products, services, and technologies. It follows the Russell 1000 Telecommunications RIC 22.5/45 Capped Index, holding 21 stocks in its basket. iShares U.S. Telecommunications ETF is highly concentrated on the top three firms with double-digit exposure each and Cisco taking the top position at 15.3% of assets.

iShares U.S. Telecommunications ETF has AUM of $438.9 million and trades in an average daily volume of 166,000 shares. IYZ charges 42 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: How Will Telecom ETFs React to Decent Q3 Earnings?).

iShares North American Tech-Multimedia Networking ETF

iShares North American Tech-Multimedia Networking ETF provides exposure to telecom equipment, data networking and wireless equipment companies by tracking the S&P North American Technology-Multimedia Networking Index. iShares North American Tech-Multimedia Networking ETF holds 22 securities in its basket with Cisco taking the fifth spot with 7.5% allocation.

iShares North American Tech-Multimedia Networking ETF has accumulated $135.2 million in its asset base and sees a moderate volume of around 12,000 shares a day. IGN charges 43 bps in annual fees and carries a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 Top-Ranked ETFs Outperforming to Start November).

First Trust Nasdaq Cybersecurity ETF

First Trust Nasdaq Cybersecurity ETF follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. The index includes companies primarily involved in the building, implementation, and management of security protocols applied to private and public networks, computers, and mobile devices in order to provide protection of the integrity of data and network operations. First Trust holds Nasdaq Cybersecurity ETF holds 26 stocks in its basket with Cisco taking the fourth spot at 5.3%  

First Trust Nasdaq Cybersecurity ETF has accumulated $5.8 billion in its asset base. CIBR charges 60 bps in annual fees and trades in an average daily volume of about 800,000 shares.

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