Networking hardware provider Cisco Systems (NASDAQ:CSCO) is scheduled to report its fiscal first-quarter results after the market closes on Wednesday, Nov. 14. The company is expecting mid-single-digit revenue growth to continue, but the impact of U.S. tariffs on networking equipment imported from China could mar its outlook.

What happened last time

Cisco's fiscal fourth-quarter report in August marked the third straight quarter of revenue growth following a two-year period of declining sales. Revenue expanded at the fastest rate since early 2015, and the company beat analyst estimates across the board.

Metric

Q4 2018

Change (YOY)

Compared to Average Analyst Estimate 

Revenue

$12.8 billion

5.9%

Beat by $80 million

Non-GAAP earnings per share

$0.70

14.8%

Beat by $0.01

Data source: Cisco. YOY = year over year.

Revenue grew in all of Cisco's major segments, with double-digit growth in both applications and security. The infrastructure platforms segment, which contains the company's bread-and-butter switching and routing businesses, expanded by 7% year over year. The success of the subscription-based Catalyst 9000 switching platform, the fastest-ramping product in Cisco's history according to CEO Chuck Robbins, helped the cause.

Acquisitions drove some of Cisco's growth. The company shelled out $3.7 billion for software company AppDynamics last year, and it paid another $2.35 billion for Duo Security in August. Cisco has been shifting toward software for years, and these acquisitions fit in with that strategy.

What analysts are expecting

Cisco expects to produce first-quarter year-over-year revenue growth between 5% and 7%, along with non-GAAP earnings per share between $0.70 and $0.72. Those ranges are both in line with analyst expectations.

Metric

Average Analyst Estimate

Change (YOY)

Revenue

$12.9 billion

6%

Non-GAAP earnings per share

$0.72

18%

Data source: Yahoo! Finance.

An analyst at Deutsche Bank expects Cisco stock to go much higher. Vijay Bhagavath cited upgrade cycles and refreshes in some of Cisco's businesses to justify some optimistic price targets last month. The analyst's bullish scenario involves 7% annual revenue growth and low-teens free cash flow growth, good for a price target of $75 per share. Bhagavath's base case has a price target of $55 per share. The stock is currently hovering around $45 per share.

Analysts are overall bullish on the stock, with eight strong buy ratings, 11 buy ratings, and eight hold ratings, according to data compiled by Yahoo! Finance.

Watch for headwinds

Everything seems to be going right for Cisco, but there is at least one thing to worry about. The latest batch of U.S. tariffs on Chinese goods included some of Cisco's networking products. Those tariffs prompted the company to raise prices by 15% on certain products, according to NetworkWorld. Cisco's first-quarter report should shed some light on how Cisco's customers reacted to the price increases.

Two shipping containers painted with U.S. and Chinese flags.

Image source: Getty Images.

Some Cisco customers may choose to delay planned upgrades due to the increased prices. If the ongoing trade war leads to a recession, or even just causes companies to behave more conservatively given the increased uncertainty, Cisco's robust growth rate may not hold up. Cisco management should have more to say on tariffs and the global economic environment during the earnings call.

Cisco's outlook will probably matter more to investors than its first-quarter results. If the company's guidance shows any indication that tariffs are causing problems, the stock could tumble. On the other hand, the stock could rise if Cisco shows confidence that it can weather the storm while maintaining solid growth rates. We'll know more on Wednesday afternoon.

Timothy Green owns shares of Cisco Systems. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.