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Research Market strategy
by Swissquote Analysts
Morning News

Cisco Sales Fall in Latest Quarter, but Beat Forecasts

Topic of the day

Cisco Systems Inc. said revenue moved lower in its latest quarter and warned of weaker growth ahead. The networking-equipment giant on Wednesday said it expects revenue to drop between 1.5% and 3.5% in its current quarter. Such a decline would come on top of a 3.5% year-over-year drop in revenue for the company's fiscal second quarter, which ended Jan. 25. Cisco is seen as a proxy for hardware demand from corporations. Overall, Cisco reported $12 billion in revenue for the latest period, compared with $12.45 billion the year earlier. The latest results beat analysts' forecasts. Cisco's infrastructure-platforms business, covering its main networking hardware and software products, reported an 8% decline in sales to $6.53 billion in the latest quarter. The company's applications unit, which includes videoconference and tools for monitoring various applications, generated $1.35 billion in revenue, also down 8%.

Swiss stocks

After reaching a new all-time high on 11,120 points, the SMI slid 0.1 percent to 11,089 points Wednesday as investors took profits. The Swiss exchange was also pulled down by a strong Swiss franc against the euro. Defensive heavyweights Nestle fell 1.3 percent and Roche 0.4 percent. Novartis closed unchanged. Analysts noted that the new all-time highs were driving the stock’s ongoing upward revaluation. Luxury good stocks Swatch 1.6 percent and Richemont gained 1.5 percent to lead the SMI. Traders pointed to good financials from competitor Kering, especially Gucci’s figures. A further decline in Japan’s mechanical engineering order intake figures pushed ABB down 0.2 percent. Among second-tier stocks AMS slumped 1.6 percent after announcing a share placement, which traders say could also account for the previous days’ losses. Gurit climbed 0.9 percent after announcing the sale of its Hungarian car parts business. Logitech rose 1.1 percent on presenting a new web camera.

International markets

Europe

European stocks rally as reports of a slowdown in new coronavirus infections cause worries to fade. "While the economic impact on China will take months to calculate, and is certainly not yet fully apparent, it does look like investors have decided the virus is no longer a threat," IG analyst Chris Beauchamp says. The pan-European Stoxx 600 rises 0.6% to 431.16 points, the FTSE 100 increases 0.5% to 7,534.37, the DAX adds 0.9% to 13,749.78 and the CAC-40 is up 0.8% at 6,104.73. Sweden's Evolution Gaming Group is a top riser, up 14.6% after reporting higher 2019 revenue and earnings. Dutch bank ABN Amro is the biggest faller, down 6.2% after its fourth-quarter net income missed expectations. Kering (+6,3%) reported 2019 figures on Wednesday. The French luxury-goods conglomerate reported fourth-quarter revenue of 4.36 billion euros ($4.76 billion), up 11% on a comparable basis and bringing revenue for the year up to EUR15.88 billion, in line with analysts' expectations of EUR15.8 billion. As expected, net profit for the year fell to EUR2.31 billion from EUR3.71 billion, largely as a result of a large tax settlement. Societe BIC (-5,3%) said Wednesday that profit sharply fell in its fourth quarter and it expects broadly flat sales for 2020. Net profit in the quarter fell to 23.5 million euros ($25.6 million) from EUR49.8 million euros a year earlier, the French consumer products company said. Sales decreased to EUR501.2 million from EUR511 million.

United States

U.S. stocks climbed to new highs intraday as concerns about the economic impact of the coronavirus outbreak continued to ease. The S&P 500 added 0.5% and the Nasdaq Composite advanced 0.7%, a day after both indexes closed at new highs. The Dow Jones Industrial Average gained 0.8%, putting it on pace for a record close as well. Shares that had fallen in recent days as investors worried about the economic effects of the outbreak in China-such as energy companies and cruise lines-posted gains. "The coronavirus is still the main narrative," said James Athey, a senior investment manager at Aberdeen Standard Investments. The economic impact of the virus is still unclear, as figures for the first quarter haven't been released yet, he said. "The market is finding a way to consistently see the positive in everything in the absence of bad news." Companies that have seen their share prices fall amid concerns about the outbreak gained ground. Shares of Royal Caribbean Cruises , Norwegian Cruise Line Holdings and Carnival each rose more than 2%. Airline shares also ticked upward, with United Airlines Holdings , Delta Air Lines and American Airlines Group each adding more than 1%.

Asia

Today, Asian markets were mixed in early trading as the number of new coronavirus outbreak victims soared in China. China's Hubei province reported nearly 15,000 new cases of COVID-19 due to a change in diagnosis methodology. Chinese officials said the change was made so that more patients could receive treatment, but the new numbers threw more uncertainty at the severity of the outbreak and China's ability to contain it.

Bonds

U.S. government bonds pulled back intraday for the second consecutive session, reflecting decreased demand for safer assets and supply pressures ahead of a $27 billion auction of 10-year notes. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 1.633%, according to Tradeweb, compared with 1.589% Tuesday.

Analysis

HSBC lowers the Glaxo target to 2.050 (2.110) p – Buy
CS rises the AMS target to 41,50 (40,50) CHF – Underperform
IR rises the Nokia target to 4,30 (3,60) EUR – Hold


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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