Cisco Systems is gearing up to release its latest earnings report for the first quarter of 2014 in today’s US market hours. CSCO shares could be in for a selloff if the actual revenue figures come up short of analysts’ expectations.
The daily chart also reveals that a reversal is pending for CSCO shares, as the price has formed a head and shoulders pattern. The neckline has yet to be broken and this is in line with a former resistance level and the 50 SMA (simple moving average) and 200 SMA crossover.
CSCO Shares Forecast
A break below the $22.50 price level could confirm that more losses are in the cards for CSCO shares. The company is expected to report earnings of 48 cents per share, down from the previous 51 cents per share. As for revenue, the figure is slated to come in at $11.36 billion, lower compared to the previous $12.2 billion.
Weaker corporate IT demand has weighed on CSCO shares for the past few weeks, leading stock prices to stall around key technical resistance levels. MACD is moving down from the overbought region, indicating increased selling pressure for the company stock.
A break below $22.50 could lead to as much as $1 in losses for each share, as the head and shoulders pattern is roughly the same height. On the other hand, stronger than expected earnings figures could lead to a bounce back to the top of the formation around the $23.50 level.
Analysts believe that the company could weather the ongoing slowdown in the tech and IT sector, as Cisco is a leader in enterprise networking. It is able to charge premium prices for its products, spanning from high-end proprietary hardware to highly-integrated software.
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