Cisco Runs With Bulls

Updated from 6:53 a.m. EDT

It's time to check what's left in Cisco's (CSCO Quote) tank.

The San Jose, Calif., networking giant has been cruising on all cylinders for the past three quarters, putting a 50% stock climb in its rear window. Now investors eagerly await Cisco's fiscal third-quarter results after the market closes Tuesday.

Analysts say the company has posted strong sales in developing markets as well as with cable and phone customers. If things go according to expectations, those revenues should be enough to balance the sluggish growth of Cisco's core business market, say analysts: U.S. IT spending.

"Those three areas of strength have been enough to offset softness in North America enterprise, which for many years had been Cisco's bread and butter," JPMorgan analyst Ehud Gelblum writes in a note Monday.

Shares of Cisco were rising 1% to $28.08 ahead of the numbers.

It's always good to have other units pick up the slack. And some even argue that there's not so much slack. Weak reports from tech titans such as IBM (IBM Quote) and Sun (SUNW Quote) seemed to confirm suspicions that spending was going away this year.

But reports from gear peers such as Nortel (NT Quote) and Juniper (JNPR Quote) suggested that networking gear buyers aren't quite as stingy as expected.

The main concern now is whether Cisco's stock has outrun its financial performance. Given the shares' 6% rise last week, a number of industry observers are concerned that anything short of a blowout quarter and raised growth targets from Cisco will disappoint the optimists.

Analysts expect an adjusted profit of 33 cents a share on sales of $8.76 billion in sales for the fiscal third quarter ended last month. And looking ahead to the end of the current quarter, analysts are looking for 5% sequential sales growth.

Cisco will likely continue to benefit from its solid position as the top supplier of computer networking gear. And through recent acquisitions such as WebEx (WEBX Quote), the company could see some added growth in promising areas including cable gear and video conferencing, say analysts.

"Cisco should be able to grow at the upper end of its long-term 10% to 15% growth target over the next several years," Jefferies & Co. analyst Bill Choi wrote in a research note. "We point to favorable market share dynamics across all major product segments and a successful strategy of creating new businesses around adjacent markets."