Juniper Networks, Inc. (JNPR) in Sunnyvale, Calif., is a leading networking and security solutions provider whose product portfolio includes ACX series universal access routers, EX-series Ethernet switches, and SRX series services gateways. On Oct. 26, 2021, the company said that the semiconductor shortage and ongoing component and supply chain challenges are expected to persist for the coming quarters. However, the company believes that it will have access to sufficient supplies of semiconductors and other components to meet its financial forecast. Its revenue is expected to be roughly $1.27 billion for the fourth quarter, ended Dec. 31, 2021.
JNPR’s shares soared to hit their 52-week price high of $36.03 on January 11, 2022, after BofA Global Research upgraded its rating to ‘buy’ from ‘underperform.’ The stock has gained 19.7% in price over the past three months and 3.3% over the past month to close the last trading session at $34.64.
Furthermore, JNPR has witnessed increased demand for its services over the past few months. Last December, Aston Martin Cognizant Formula One Team announced a partnership, making JNPR its official networking equipment vendor. Also, Malaysia-based Allo Technology Sdn. Bhd. selected Juniper Networks in October 2021 to upgrade its existing network infrastructure. So, JNPR’s near-term prospects look promising.
Here are the factors that could influence JNPR’s performance in the upcoming months:
Consistent Product and Services Innovations
JNPR announced new enhancements to the global Juniper Partner Advantage Program (JPA) on Dec. 1, 2021. The company announced a new support solution on Nov. 2, 2021, driven by artificial intelligence (AI) that delivers holistic visibility and insights across its entire Junos portfolio. It also announced two new 6 GHz access points on the same date. They leverage Mist AI to maximize Wi-Fi performance and capacity, while simplifying IT operations.
Solid Financials
For the third quarter, ended Sept. 30, 2021, JNPR’s total revenues increased 4.4% year-over-year to $1.19 billion, driven by strong order momentum and record backlog. The company’s revenue from the cloud segment increased 19.8% year-over-year to $303.30 million, while its revenue from the enterprise segment came in at $439.70 million, up 7.2% year-over-year.
Its non-GAAP operating margin for the quarter came in at 16.6%, versus 15.8% in the prior-year period. And its non-GAAP net income was $152 million, representing a 7.8% year-over-year rise. Its non-GAAP EPS increased 7% year-over-year to $0.46.
Favorable Revenue and EPS Estimates
JNPR’s revenue is expected to increase 3.8% for the quarter ended December 31, 2021, and 5.8% in its fiscal 2021. Its revenue is further expected to increase 6.6% for the quarter ending March 31, 2022. In addition, its EPS is expected to rise 11% in its fiscal 2021 and 14% in fiscal 2022. And its EPS is expected to grow at a 9.4% rate per annum over the next five years.
POWR Ratings Reflect Rosy Prospects
JNPR has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. JNPR has a B grade for Quality, which is in sync with its 58.11% and 9.71% respective trailing-12-month gross profit margin and EBIT margin, which are higher than the 49.47% and 9.27% industry averages.
The stock has a B grade for Value, which is consistent with its 20.25x and 2.39x respective forward non-GAAP P/E and forward P/S which are lower than the 24.40x and 3.95x industry averages.
JNPR is ranked #10 of 55 stocks in the Technology - Communication/Networking industry. Beyond what I have stated above, we have also given the stock grades for Growth, Momentum, Stability, and Sentiment. Get all the JNPR ratings here.
Bottom Line
JNPR’s shares hit their 52-week high recently but appear to have further upside to deliver Analysts expect its revenue and EPS to soar in the near term. Moreover, it is well-positioned to benefit from consistent technological advances in the cloud, AI, and 5G space. So, we think it could be wise to add the stock to one’s portfolio now.
How Does Juniper Networks (JNPR) Stack Up Against its Peers?
While JNPR has an overall POWR Rating of B, one could also check out these A-rated (Strong Buy) stocks within the Technology - Communication/Networking industry: Digi International Inc. (DGII), Extreme Networks, Inc. (EXTR), and AudioCodes Ltd. (AUDC).
JNPR shares were trading at $34.17 per share on Tuesday morning, down $0.47 (-1.36%). Year-to-date, JNPR has declined -4.31%, versus a -3.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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