Networking equipment giant Cisco Systems (NASDAQ: CSCO) hasn't been kind to its investors recently. The stock has fallen 18% over the past 52 weeks, missing out on a 12% gain in the S&P 500 index. The tech-heavy Nasdaq Composite Index rose 24% over the same period. Is it time to give up on this struggling giant, or is Cisco a solid buy right now?
The bulk of Cisco's negative stock returns followed from a modest second-quarter report in mid-February. Cisco's sales fell 4% year over year and adjusted earnings rose by 6%, all roughly in line with analyst estimates. However, those Wall Street projections were set according to a disappointing set of official guidance targets from Cisco's first-quarter report.
Cisco's management admitted that many target markets are struggling these days, held down by macroeconomic challenges like Brexit and the Chinese-American trade tensions. The coronavirus outbreak did not affect the company's guidance for the third quarter and was only mentioned in passing on Cisco's second-quarter earnings call. As the disease continued to spread across China and the world, Cisco's shares fell just a little bit faster than the market as a whole. Investors clearly expect a significant coronavirus impact on Cisco's results in 2020, and I wouldn't be surprised to see the company issuing a new set of lower third-quarter estimates.
Source Fool.com