Cisco falls after Q1 gross margin misses estimates
CSCO•Cisco reported a Q1 gross margin of 63.7%, below the 65.60% analyst forecast, despite beating expectations for revenue and non-GAAP earnings. The company raised its FY revenue forecast to $74.8 billion-$75.8 billion and expects adjusted EPS of $5.47-$5.53.
1. Margin misses forecast
Cisco shares fell 3% ahead of the opening bell after the company reported a Q1 gross margin of 63.7%, below analysts’ 65.60% forecast. Gross margins are under scrutiny as a shortage of memory chips has increased input costs. Cisco beat expectations for Q1 revenue and non-GAAP earnings.
2. Annual outlook raised
Cisco raised its FY revenue forecast to $74.8 billion-$75.8 billion from $72.2 billion-$73.4 billion. It expects adjusted EPS of $5.47-$5.53, above the $5.34 estimate at the midpoint.
3. Analyst ratings
Of 29 brokerages rating the stock, 17 rate it “buy” or higher and 12 rate it “hold”; the median price target is $135. The stock trades at 19.15 times expected EPS for the next 12 months, compared with an industry median of 13.88 times, and was up more than 32% year to date as of the previous close.
