Cisco's Bleak Guidance Puts These ETFs In Focus

After the closing bell on Wednesday, Nov 13, tech prime Cisco Systems (CSCO - Free Report) dampened investors’ mood when it reported first-quarter fiscal 2020 results as it sparked fears of a slowdown in global tech spending with a bleak outlook. However, the networking giant beat on both earnings and revenues.

Results in Detail

Earnings of 84 cents per share outpaced the Zacks Consensus Estimate by three cents and improved 12% from the year-ago earnings. Revenues rose 2% year over year to $13.2 billion and edged past the consensus mark of $13.02 billion partially on stronger software subscriptions.

Cisco expects revenues to decline 3-5% from the year-ago level and earnings per share in the range of 75-77 cents in second-quarter fiscal 2020. The low-end of both the ranges is below the Zacks Consensus Estimate of 2.72% for revenue growth and earnings per share of 80 cents. The weak outlook suggests that companies are postponing hardware purchases amid global political and economic uncertainty, including the China-U.S. trade standoff.

The bleak guidance pushed shares of Cisco down as much as 5% in after-hours trading on heavy volumes. The stock currently has a Zacks Rank #4 (Sell) and VGM Score of C. However, it belongs to a bottom-ranked industry (bottom 8%).

ETFs to Watch

Given this, the ETF world is also expected to see rough trading especially the ones which have the largest allocation to this network giant. Below, we have highlighted five of them:

iShares North American Tech-Multimedia Networking ETF (IGN - Free Report)

This ETF provides concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 21 securities in its basket, Cisco takes the fourth spot with 8.6% allocation. The product has accumulated $87.4 million in its asset base while seeing a lower volume of around 31,000 shares a day. Expense ratio comes in at 0.46%. The fund carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.

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