Analysts polled by FactSet are expecting earnings per share of 77 cents on average, and have an average price target of $56.50 per share. Year to date, Cisco's stock is up 22%.
Can Cisco keep up the pace? Here are a few key issues to watch.
1. Enterprise Spending Slowdown
Since taking the reins at Cisco in 2015, CEO Chuck Robbins has sought to transform the maker of networking equipment into a more diversified business with software and subscription offerings. In the coming months, Cisco's progress could be tempered somewhat by an apparent slowdown in enterprise IT spending, which observers have been sounding the alarm on for a number of months. Analysts have debated whether the slowdown amounts to a pause or the end of a spending cycle; either way, it could potentially affect several of Cisco's business lines, from networking equipment to services. Whether any spending slowdown can be offset by growth trends across Cisco's business is an open question heading into earnings.
2. Growth in Security
Demand for cybersecurity services continues to expand, and Cisco isn't alone in trying to stake out an aggressive position in the growing space. One notable instance of this was Cisco's acquisition of Duo Security, which closed in October of last year. A partner survey by Baird Equity Research suggested that Cisco is having success in taking some security share from Juniper (JNPR - Get Report) , Check Point (CHKP - Get Report) , Symantec (SYMC - Get Report) and others. "Partners continue to cite security as the biggest demand driver for 2019, despite certain challenges...potential area of upside is the addition of Duo to the security portfolio which partners are enthusiastic about," wrote analyst Jonathan Ruykhaver on Monday. Investors will be on the lookout for further signs of how Cisco is stacking up versus security rivals.
3. Macro Clouds, Weak Guidance
The markets have taken a hit amid renewed U.S.-China trade worries, and some of that extends to Cisco as well. Piper Jaffray analyst James Fish called out escalating tariffs as one potential reason for a pause heading into Cisco's earnings. Compounding that is the evident slowdown in enterprise spending and spending by service providers, more headwinds that could point to weaker-than-expected third quarter guidance: "While we continue to appreciate the story over the next year, we believe it is prudent to be cautious around Cisco into the print," Fish wrote.