Cisco (CSCO) Posts Strong Q1 But Falls on Soft Outlook

Shares of Cisco Systems (NASDAQ: CSCO) are trading down 5% after-hours Thursday following better-than-expected first quarter results, which were overshadowed by second guidance that was below the Street.

Cisco's revenue in the first quarter grew 3.6% to $12.7 billion, which was in-line with the consensus. Non-GAAP EPS grew 9.3% to $0.59, versus the consensus of $0.56.

For the second quarter, Cisco sees revenue growth of 0%-2%, which translates to $11.94 billion-$12.17 billion. This versus the consensus of $12.55 billion. The company sees second quarter EPS of $0.53-$0.55, versus the consensus of $0.56.

"Our guidance reflects lower than expected order growth in the first quarter, driven largely by the uncertainty of the macro environment and currency impacts," Chief Executive Officer Chuck Robbins said.

Some analysts were positive on the stock despite the soft outlook. "Despite a soft 2Q:FY16 outlook on a slowing macro environment, Cisco's stock remains inexpensive at just 9x (ex-cash) our CY:16 EPS projection with a 3.4% dividend yield," Drexel Hamilton's Brian White said. "As such we are buyers of Cisco on weakness."

The firm retained a Buy rating and $35 price target on Cisco.

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