What Happened?
Shares of networking technology giant Cisco (NASDAQ: CSCO) jumped 4.8% in the afternoon session after the company reported third-quarter financial results that topped Wall Street's expectations and lifted its guidance for the full year.
The company posted revenue of $14.88 billion, a 7.5% year-over-year increase, and an adjusted earnings per share of $1.00. Both figures beat analyst estimates. More importantly, Cisco provided an optimistic outlook, raising its full-year revenue guidance by 1.8% to $60.6 billion. The company also boosted its full-year adjusted EPS forecast by 2% to $4.11, signaling confidence in its future performance and operational efficiency.
After the initial pop the shares cooled down to $76.96, up 4% from previous close.
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What Is The Market Telling Us
Cisco’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock gained 2.6% on the news that investors continued to pile into value-oriented names amid growing valuation concerns.
This shift reflected growing caution over high valuations within the technology and artificial intelligence (AI) spheres. As market participants reassessed risk, they reallocated capital from growth-heavy indices, like the Nasdaq, to companies in areas like industrials and financials, perceived to be more reasonably priced. Contributing to the positive momentum, markets remained hopeful that a prolonged 40-day government shutdown would be over. The U.S. Senate approved a compromise funding package, which was pending a vote in the House. The potential end to the shutdown brought a sense of relief to markets.
Cisco is up 30.2% since the beginning of the year, and at $76.96 per share, has set a new 52-week high. Investors who bought $1,000 worth of Cisco’s shares 5 years ago would now be looking at an investment worth $1,859.
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