(Reuters) – Cisco Systems Inc shares were down 10% premarket on Thursday after the company warned of persisting shortages in components, triggering price target cuts from at least nine brokerages as Wall Street braces for further impact on technology exports due to China’s COVID restrictions.
Cisco missed quarterly sales estimates and lowered its full-year growth forecast, which dragged down shares of peers Juniper Networks, F5 Inc and Arista Networks down 2.6% to 7% before the bell.
Enterprise-focused firms such as Cisco, which benefited as companies spent to upgrade technology infrastructure to incorporate hybrid work, have faced challenges due to a shortage in components which has worsened since key supply hub China implemented stringent COVID lockdowns in April.
“FY23 is set up to be more about supply than demand, even as orders will likely decline on tough comps,” said JP Morgan lead analyst Samik Chatterjee, adding that Cisco’s order backlog of $15 billion provides some support.
The San Jose, California-based company took a $200 million hit after ceasing operations in Russia and Belarus last quarter and forecast a decrease of 1% to 5.5% in current-quarter revenue, partly due to slower imports of key components from China.
Meanwhile, analysts flagged rising competition.
Software business seems to be underperforming while “core enterprise/commercial of the core hardware business appears to be donating share to competitors,” Piper Sandler lead analyst James Fish wrote in a note.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Krishna Chandra Eluri)