Cisco (CSCO): Waiting for an entry after earnings

Cisco CSCO recently reported its Q1 earnings, and the results exceeded expectations. With a reported revenue of $13.841 billion versus the estimated $13.775 billion, and earnings per share (EPS) coming in at $0.91 against an expected $0.872, the company delivered a positive surprise. This marks the ninth consecutive quarter where Cisco has beaten revenue estimates.

On the technical side, the previously bearish outlook has been invalidated. We have updated our chart, adjusting the wave (4) bottom to align with the lower trend channel. After a remarkable 33% rally in just 100 days, the stock is due for a “healthy” pullback, potentially targeting the range high of $52-$48. However, this will heavily depend on further market reactions to the earnings report.



From a broader perspective, we are now targeting a push towards or even above the upper trend channel for the wave 3 and subsequently the wave (5). However, these moves are long-term prospects and will take time to materialize.

The focus remains on recurring revenue, which has grown significantly year-over-year, reaching $29.6 billion in the fourth quarter. While recurring revenue from subscriptions is a bullish factor, potential concerns regarding company spending in the second half of 2024 need to be monitored.

We are closely observing the lower time frame for potential entry opportunities, keeping an eye on the anticipated pullback to confirm healthy growth momentum.