Cisco Systems(US:CSCO) ZACKSยท2025-02-13 13:51Core Insights - Cisco Systems Inc. reported strong second-quarter fiscal 2025 earnings, exceeding consensus estimates, leading to a 6.6% increase in stock price during after-market trading [1][2]. Financial Performance - Adjusted earnings per share for the quarter were $0.94, surpassing the Zacks Consensus Estimate of $0.91 and up from $0.87 a year ago [2]. - Quarterly revenues reached $13.99 billion, exceeding the Zacks Consensus Estimate by 0.91% and up from $12.79 billion year-over-year, marking revenue growth after four consecutive quarters of decline [2]. Product Performance - Networking sales continued to face challenges due to weak demand from telecommunications and cable service providers, but revenues from networking products exceeded consensus estimates in the last quarter [3]. - Revenues from observability, services, security, and collaboration increased year-over-year, also beating respective consensus estimates [4]. Strategic Developments - The acquisition of Splunk in March 2024 positively impacted adjusted earnings per share sooner than anticipated, enhancing Cisco's recurring revenue base [5]. - The launch of AI-powered Hypershield strengthened Cisco's security portfolio, with AI infrastructure orders exceeding $350 million in the second quarter and total orders around $700 million, with expectations to exceed $1 billion in fiscal 2025 [6]. Future Guidance - Cisco raised its fiscal 2025 EPS projection to a range of $3.68-$3.74 from a previous estimate of $3.60-$3.66, with the midpoint of $3.71 above the current Zacks Consensus Estimate of $3.65 [8]. - Revenue projections for fiscal 2025 were increased to $56-56.5 billion from $55.3-56.3 billion, with the midpoint of $56.25 billion also above the current Zacks Consensus Estimate of $55.93 billion [8]. Market Position - The Zacks Consensus Estimate for fiscal 2025 earnings has improved by 0.3% in the last 60 days, indicating a year-over-year increase of 3.9% for revenues and 6.9% for EPS in fiscal 2026 [10]. - Cisco's stock provided a 25.9% return over the past year, slightly outperforming the S&P 500's return of 23.4% [12]. Valuation Metrics - Cisco has a forward P/E ratio of 17.09X for the current financial year, compared to 17.32X for the industry and 18.62X for the S&P 500 [13]. - The company has a return on equity of 25.7%, significantly higher than the industry's -5.53% and the S&P 500's 16.84% [13]. Analyst Sentiment - The short-term average price target for Cisco's stock indicates a potential increase of 3.6% from the last closing price of $62.53, with a target range of $78-$56, suggesting a maximum upside of 24.7% and a maximum downside of 10.4% [14].