Investing.com - Cisco Systems (NASDAQ:CSCO) is expected to benefit from improving dynamics in the market for hardware deployed on campuses to connect end-user devices, according to analysts at Citi.
In a note to clients on Friday adding the stock to its upside 30-day catalyst watch, the analysts led by Atif Malik said demand for so-called campus switches, which account for about a fifth of Cisco's sales, is estimated to have returned to growth in the calendar fourth quarter of 2024 thanks to normalizing inventory levels.
Cisco has recently been grappling with headwinds like supply chain snags and a post-pandemic sluggishness at its crucial networking gear business.
But Malik argued that the anticipated improvement in campus switching, along with an "undemanding" comparative figure in the calendar fourth quarter of 2023 and two three-month periods of sequential growth, set Cisco up "to achieve its January quarter guidance" and potentially raise its full-year 2025 revenue outlook.
The comments come after Cisco forecast quarterly revenue and profit above Wall Street estimates in November, fueled in large part by an artificial intelligence-powered uptick in demand for networking gear.
The firm sees its January quarter revenue at between $13.75 billion to $13.95 billion, higher than analysts' average projections of $13.73 billion, Reuters reported, citing LSEG data. Adjusted quarterly profit, meanwhile, is tipped to be in a range of $0.89 to $0.91 per share, versus estimates of $0.87.
Cisco's sales dropped by 6% to $13.84 billion in the first quarter ended on October 26, although the return was still above expectations of $13.77 billion. Adjusted income per share came in at $0.91.
For its current fiscal year, Cisco estimates adjusted profit per share of $3.60 to $3.66 on revenue of $55.3 billion to $56.3 billion.
(Reuters contributed reporting.)