Cisco (CSCO - Free Report) is set to report its third quarter fiscal 2020 financial results after the market closes on Wednesday, May 13. The question for investors is should they consider buying CSCO stock ahead of earnings as big-tech proves it is resilient to the coronavirus?
CSCO shares have lagged the S&P 500’s comeback from the market’s March 23 lows, but are still up 26% over this stretch. Cisco stock popped another 1.5% in morning trading Tuesday. Despite its recent comeback, Cisco shares rest roughly 24% off their 52-week highs.
With this in mind, the maker of switches, routers, and other network-equipment could see its stock climb if it’s able to impress Wall Street.
Cisco topped our Q2 earnings estimate in February. But the networking powerhouse, which is often viewed as a proxy for broader hardware demand, provided a grim outlook, citing slowing global technology investments. Worse yet, CSCO’s guidance came before the coronavirus turned into a global pandemic.
Our current Zacks estimates call for Cisco’s Q3 revenue to fall -8.4% from the year-ago period. This would mark a downturn against Q2’s 3.5% decline in revenue and come in well below its previous guidance that called for a drop between 1.5% and 3.5%.
Meanwhile, its adjusted EPS figure is projected to slip 7.7% from the year-ago period to $0.72 a share. Cisco does boast a solid history of quarterly earnings beats, but its Q3 consensus estimate has fallen 10% in the last 60 days.
Cisco is currently a Zacks Rank #3 (Hold) and its 3.31% dividend yield is attractive and easily tops Intel (INTC - Free Report) , Oracle (ORCL - Free Report) , and Microsoft (MSFT - Free Report) . However, investors might want to stay away from Cisco until after it reports, or look for stronger investments within big-tech.
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