Cisco’s Earnings Fell short of Estimates – Al-Rajhi Capital

Cisco posted a SR4 million profit, in Q3-2021, that fell too short of SR10 million forecasts, Al-Rajhi Capital stated.

The reason for the discrepancy in profits from expectations, was a reduction in port sector revenues.

Cisco’s profits, according to Al-Rajhi Capital, will drop to SR83 million by the end of 2021, down 40% from SR139 million, in 2020, and will continue to decline, in 2022, reaching SR77 million, a 7% drop from 2021 profits.

On the other hand, Al-Rajhi Capital lowered its target price for Cisco’s stock to SR37, down from SR47 previously predicted, and despite the decrease, it maintained recommending increasing the weight of the stock, citing the company’s strong cash balance following the sale of its stakes in the Red Sea Gateway

That can be used to reinvest in emerging opportunities, in the logistics and port sectors,

Total profit was impacted, in Q3-2021, due to a decrease in flight volume, which also impacted freight revenues and gross profit margins.

Cisco also completed the sale of a stake in the Red Sea Gateway, in Q3, 2021, resulting in an increase in the minority share of net income from the port sector.

After accounting for theoretical gross income margins were 43.5% in Q3-2020 compared to 51% in Q3, 2020.

An increase in religious and recreational tourism, as well as a slight boost, in the overall economy, are expected to improve freight travel, in 2022, Al-Rajhi Capital concluded.