Cisco snaps 7-day win streak fueled by positive Q4 results

Cisco Systems (NASDAQ:CSCO) snapped a seven-day win streak that was fueled by positive quarterly results, ending the day 0.46% lower from its previous close at $50.22.

The digital communications technology conglomerate added 12% over the course of the last seven trading days, while the tech-heavy NASDAQ Composite Index increased by merely 6.64%.

A significant gain was recorded on Thursday, August 15. CSCO closed the day, one day prior to the company’s Q4 earnings release, 6.80% higher at $48.53.

As widely expected, the San Jose, California-based company exceeded Wall Street estimates. Its financial results featured an earnings beat, a 7% reduction in workforce and a shift in the business’ focus.

The stock is trading 7% above its 20-day simple moving average.

Short interest stood at 1.31% of the total float as of July 31, representing 52.56M shares sold short.

The average sell-side analyst rating on CSCO is Buy.

The cyclical headwinds are now behind and Cisco is returning to growth. The transition to subscription-based and software-defined products will drive continued margin expansion, New Street analysts noted.

HSBC analysts said many of the investment bank’s covered companies selling into the networking market reported weak results over the last several quarters due to destocking by customers. However, the period of destocking is behind and that sector demand is inflecting.

Seeking Alpha analysts also rate the stock as Buy.

Management laid out the groundwork for the next generation of Cisco as the firm undergoes a major restructuring to enhance their AI networking capabilities. Despite a dimming macroeconomic environment, Cisco is well-positioned for growth as enterprises invest in faster bandwidth capabilities for AI/ML testing and inferencing, SA contributor Michael Del Monte noted.

“Product orders grew 14% year-over-year, indicating recovery from inventory destocking issues,” said SA author Lighting Rock Research.

Meanwhile, the Quant Rating system grades the stock as Hold, with a score of 3.32 on a scale of 5. Quant gives CSCO a C+ for Valuation, F for Growth, A+ for Profitability, C+ for Momentum and B- for Revisions.