Cisco Stock Slides as Supply Chain Issues Bruise Revenue Forecast

Credit Suisse lowered its price target

Deputy Editor
Nov 18, 2021 at 10:20 AM
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The shares of Cisco Systems Inc (NASDAQ:CSCO) are down 8.4% at $52.02 this morning, following the industrial company’s fiscal first-quarter earnings report. The firm posted profits of 82 cents per share, which just topped analysts’ estimates, while its revenue fell short of expectations. Cisco also shared a current-quarter revenue forecast that fell below expectations, as the company continues to buckle under the weight of supply chain shortages and delays.

Credit Suisse lowered its price target to $73 from $74 in response, while J.P. Morgan Securities chimed in, saying Cisco’s broad product portfolio has made the challenges of supply chain disruptions inevitable, despite the company’s preparedness. The brokerage bunch remains mostly bullish, however, and heading into today 10 of the 16 in coverage called CSCO a “buy” or better. Plus, the 12-month consensus price target of $62.54 is a 19.5% premium to current levels. 

Options bulls aren't letting today's pullback deter them. Within the first hour of trading, 73,000 calls and 28,000 puts have exchanged hands, which is 13 times the intraday average. The November 53 call, which expires tomorrow, is the most popular, followed by the 52.50 call in the same series, with positions being opened at both. 

This penchant for calls has been the norm. In the past 10 weeks, 3.6 calls have been picked up for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 72% of all other annual readings, implying long calls have been more popular than usual. 

Today's drop has CSCO breaching almost every short- and long-term trendline, however, including the 160-day moving average, which captured the stock's pullback from its Aug. 25 all-time high of $60.27 earlier last month. The equity is still up 15.6% for the year, though it's now trading at its lowest level in nearly six months. 

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