By Swissquote Analysts
Cisco Raises Outlook as Its Earnings Top Expectations
Topic of the day
Cisco Systems Inc. raised its outlook for the year after posting better-than-expected results, a bright spot among technology companies facing continuing challenges from inflation and other macroeconomic impacts. The results beat Cisco’s forecast for the quarter on both the top and bottom lines, and its outlook for the current quarter also came in ahead of Wall Street estimates, according to FactSet. Shares were up 3.3% in aftermarket trading. Chief Financial Officer Scott Herren attributed the increased full-year outlook to Cisco’s growing recurring revenue base and remaining performance obligations, backlog and steps taken to improve its supply. The networking-equipment company’s results contrast with those of other tech companies that have reported slower growth as customers extend deal cycles and tighten their budgets in response to economic uncertainty. Cisco posted net income of $2.77 billion, or 67 cents a share, for the second quarter ended Jan. 28, down from $2.97 billion, or 71 cents a share, a year earlier. Adjusted earnings were 88 cents a share, above analysts’ estimates of 85 cents. Revenue increased 7% to $13.59 billion.
On Wednesday, the SMI gained 0.4 per cent to 11,273 points. Among the 20 SMI stocks, there were 18 price gainers and two price losers. 35.96 (previously: 42.58) million shares were traded. In the luxury goods sector, Richemont (+1.5%) was boosted by Kering. Analysts saw a development for the better at Kering despite weak business figures. Sonova (+1.5%) in turn was buoyed by strong financials from Australian hearing aid provider Cochlear. Heavyweight Nestle (-0.5%) will report financial results on Thursday. Kühne+Nagel lost 1.5% being downgraded by UBS. Swisscom (+0.3%) raises salaries by 2.6 percent. A new CFO is being recruited at Comet (-4.8%). CFO Lisa Pataki will step down at the end of August. Meier Tobler can look back on an extremely successful year. Investors benefit from a 20 percent increase in the dividend, the share price shot up by 14.4 percent.
European stocks traded mostly higher on Wednesday after the announcement of a sharper-than-expected slowdown in UK inflation and a fresh round of corporate earnings. The Stoxx Europe 600 index gained 0.4% to 464.4 points. In Paris, the CAC 40 and SBF 120 rose 1.2% and 1.1%, respectively. The DAX 40 in Frankfurt added 0.8%, while the FTSE 100 in London increased by 0.6%. The British index broke the 8,000-point barrier for the first time in the session and closed at a new high of 7,997.83 points. The retailer Carrefour (+8.5%) reported a strong sales growth in the fourth quarter, supported by dynamic markets in Latin America but also in France, where the rise in energy prices has weighed less on household purchasing power than in other European countries. The luxury goods group Kering (+3%) intends to pay a higher dividend for the 2022 financial year, despite a drop in its sales in the fourth quarter due in particular to the health situation in China at the end of the year. Stationery, lighters and shavers maker Bic (-9.8%) revealed results below analysts' forecasts for fiscal 2022 and said it expects sales growth to slow further this year. Cable manufacturer Nexans (-1.7%) delivered a generally cautious outlook for 2023. Gambling operator La Française des Jeux (-5.4%) expects further revenue growth and profitability to be maintained in 2023, after meeting its targets last year.
Stocks bobbled Wednesday after data showed a rebound in retail sales, a sign of economic strength that could encourage the Federal Reserve to keep raising interest rates. The indexes spent much of the day in the red, then turned higher. The Nasdaq Composite Index climbed 110.45 points, or 0.9%, to 12070.59. The S&P 500 rose 11.47 points, or 0.3%, to 4147.60. The Dow Jones Industrial Average bumped up 38.78 points, or 0.1%, to 34128.05. New data showed retail sales rose 3% in January, bouncing back from recent declines as jobs growth accelerated. As for individual stocks, Airbnb rose $16.14, or 13%, to $137.01 after quarterly earnings beat analysts’ forecasts and the travel company recorded its first full-year profit. Stock in Tripadvisor edged up by 7 cents, or 0.3%, to $25.20 after the online travel site posted a surge in revenue in its latest quarter, also benefiting from the postpandemic travel rebound. Devon Energy fell $6.71, or 10%, to $57.23 after the Oklahoma oil-and-gas producer reported a decline in fourth-quarter earnings. Taiwan Semiconductor Manufacturing’s American depositary receipts dropped by $5.20, or 5.3%, to $92.76 after a filing Tuesday showed Warren Buffett’s Berkshire Hathaway cut its position in the chip maker. About three-quarters of companies in the S&P 500 index have reported fourth-quarter earnings. Of those, about 70% have beaten analyst forecasts for earnings per share, according to FactSet. Companies, though, typically top expectations, so that hasn’t been sufficient to give the broad market a boost in recent weeks.
In Asia, major indexes broadly closed with gains on Thursday. South Korea’s Kospi rose 1.8%, Hong Kong’s Hang Seng added 2.2% and Japan’s Nikkei 225 gained 0.8%. China’s Shanghai Composite edged 0.8% higher. Among individual stocks, China Eastern Airlines (+4.8 per cent) and Air China (+4.1 per cent) benefit from increased load factors in January. Real estate stocks are also strongly sought after, with Country Garden and Longfor each gaining 4.3 per cent and China Vanke 2.6 per cent. In Seoul Samsung C&T climbs by 4.2 per cent after it announced its intention to cancel all shares held by itself over the next 5 years. SK Innovation recovered 3.2 per cent from the previous day's 7 per cent drop.
U.S. government debt yields have mostly increased along the curve this month following strong jobs data and received a further boost from Tuesday’s consumer-price index report as well as from Wednesday’s retail sales having grown by a surprising 3% last month. The 10-year Treasury note gained 5 basis points to 3.800%. The 2-year Treasury note, on the other hand, eased by 3 basis points to 4.614%.
UBS raises ABB target to CHF 36 (32) - Buy
Bryan Garnier starts Nestlé with Neutral and target 119 CHF
UBS lowers Kuehne+Nagel to Neutral (Buy) - Target 238 (246) CHF
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