Cisco Systems Q3 results likely to show improvement in bookings, sales
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Cisco Systems (NASDAQ:CSCO) is slated to report fiscal third-quarter results after the close of trading on Wednesday and Wall Street is expecting continued improvement in bookings and sales as the supply chain continues to ease following the pandemic.
Raymond James analyst Simon Leopold, who has an outperform rating and per-share price target of $63 on Cisco (CSCO), noted he is "optimistic" about the supply chain improvement, which he believes will enable a quarterly beat and at least maintain its prior forecast of roughly 10% sales growth. 
"That said, we still worry about the macro catching up with Cisco in [calendar 2023] and/or investors taking their queue from backlog reduction, similar to Juniper," Leopold wrote in an investor note. "Investor sentiment has definitely turned more negative, while industry checks remain solid." 
A consensus of analysts expect Cisco (CSCO) to earn an adjusted 97 cents per share on $14.36B in revenue, up roughly 11.9% from the year-ago period.
In February, Cisco (CSCO) said it expects its fiscal third-quarter earnings, excluding one-time items, between 96 cents and 98 cents a share, with revenue rising 11% to 13% from a year ago. 
Morgan Stanley analyst Meta Marshall, who has an equal-weight rating and per-share price target of $55 on Cisco (CSCO), is expecting conditions to deteriorate, though security spending may be a bright spot.
"Heading into [the third-quarter] we expect backlog to continue to provide support to revenue, putting more risk on the orders number as checks continue to point to softer enterprise demand, and while federal strength provides a benefit to CSCO, not likely enough to offset (particularly given service provider / cloud headwinds)," Marshall wrote in an investor note. 
Marshall added the backlog is enough to support revenue for now, but a quicker decline in the backlog than expected could add up to a weak fiscal 2024 due to difficult order comparisons and a payment deferral program.
J.P. Morgan analyst Samik Chatterjee, who rates Cisco (CSCO) neutral with a per-share price target of $55, said the quarterly results and even a potential guidance hike may not matter if investors are focused on orders.
"In summary, we believe the 'bogey' for investors will be the -22% [year-over-year] decline in orders, which if repeated this quarter, despite much easier comps, will be seen as definitive proof of a much weaker demand backdrop," Chatterjee wrote in an investor note.
Chatterjee added that Cisco (CSCO) likely started the quarter at a "robust pace" for orders, but its peers had weaker-than-expected orders for both their enterprise and cloud customers, which could be a concern.
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