Cisco Stock Jumps as Turnaround Efforts Spark Revenue Growth

The shares hit a 17-year high out of the gate

Feb 15, 2018 at 9:50 AM
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Shares of Cisco Systems, Inc. (NASDAQ:CSCO) are up 4.7% to trade at $44.17, hitting a 17-year high of $45.21 out of the gate. The tech firm reported adjusted fiscal second-quarter profit of 63 cents per share on $11.9 billion in revenue -- its first quarterly revenue increase in more than two years, thanks to its shift to software. The results beat expectations, and gave upbeat current-quarter guidance after its recent Broadsoft acquisition.

Cisco earnings drew a round of applause from Wall Street, with a number of analysts lifting their price targets for the Dow stock. Included in the mix was Deutsche Bank, which raised its CSCO price target to $55 from $52, with the brokerage firm optimistic about growth in software subscriptions.

Should today's early gains hold, it would mark Cisco stock's best day since Nov. 16. However, this positive price action is just reflective of the security's longer-term trend, with the shares up 28% year-over-year heading into today's trading.

Plus, CSCO's recent pullback from its January highs was quickly contained in the $37.50-$38.00 region, home to the equity's rising 80-day moving average and a 38.2% Fibonacci retracement of its rally off its August lows. What's more, Cisco has historically been one of the best stocks to buy after a stock market correction.

Ahead of last night's earnings reports, bullish options traders blasted Cisco stock -- with nearly 161,750 call options traded yesterday, three times the average daily volume. The bulk of the action was centered at the March 42 call, where Trade-Alert suggests new positions were purchased for a volume-weighted average price (VWAP) of $1.36. This morning, the VWAP on those back-month calls has jumped to $2.73, meaning the options bulls have already doubled their money.

 

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