Cisco (CSCO) Earnings Are Out, Looking for a Trade
We’re seeking a trade on Cisco (CSCO) now that earnings are out of the way, provided the indices continue higher in the short-term.
Cisco Systems, Inc. (CSCO) designs, manufactures and sells Internet Protocol (IP) based networking and other products related to the communications and information technology industry worldwide, also used in “the cloud” and business infrastructure.
- Same quarter revenue a year ago was 63 cents per share on sales of $11.89 billion.
- Cisco reported revenue grew by 4.7% on a year-over-year basis.
- The company said it expects third-quarter non-GAAP earnings of $0.76 to $0.78 per share on revenue of $12.96 billion to $13.21 billion.
- The current consensus earnings estimate is $0.77 per share on revenue of $12.80 billion for the quarter ending April 30, 2019.- Source: IBD
CSCO Earnings – The Trade
Cisco historically tends to continue higher on a gap and go post-EPS as illustrated in this MarketSmith weekly chart. Also note CSCO’s competitors in the lower left panel, which might move in sympathy.
- We anticipate CSCO will do the same in the weeks ahead, similar to Juniper Networks (JNPR), which is rising after an 11% beat reported on January 29, 2019.
- Digi International (DGII) also reported a beat of 167% two weeks ago. The stock popped to the top of a large base and faded over the past 7 trading days.
The caveat is elevated volatility that needs to dissipate, so we will wait 30-45 minutes or longer for LEAPS. We’d like a pullback that gets bought shortly after the “Opening Range” if price action holds above PHOD. We’ve made this trade in the past; waiting 30-45 minutes is best as profit-taking inevitably dissipates.
We’ll look out at least a month or more for ITM or slightly OTM calls, (48/49/50).
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