North America

Earnings Preview: Juniper Networks Q1 2017 (JNPR)

By: Craig Bowles

Overview

Juniper Networks, Inc. (JNPR) is slated to report 1Q 2017 earnings after the bell on Tuesday, April 25th. The earnings release is expected at approximately 4:15 p.m. ET followed by a 5:00 p.m. conference call available at Juniper Investor Relations. The company designs, develops, and sells products and services for high-performance networks worldwide.

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Outliers & Strategy

Key measures:

  • Non-GAAP Earnings Per Share (EPS): Company guidance is $0.38 to $0.44. The Street estimate is $0.42 (range $0.40 to $0.44). (source: Yahoo!.com) Consensus was $0.45 three months ago.
  • Revenues: Company guidance is $1.17 bln to $1.23 bln. Analysts expect an increase of 9.7% y/y to $1.20 bln (range $1.17 bln to $1.23 bln). Consensus was $1.19 bln three months ago.
  • Adjusted Earnings Per Share (EPS) Guidance for 2Q2017: The current Street estimate is $0.53 (range $0.46 to $0.57).
  • Revenue Guidance for 2Q2017: The current Street estimate is up 4.8% y/y to $1.28 bln (range $1.24 bln to $1.32 bln).
  • Juniper’s Price/Book of 2.1 compares to a 5-year average of 1.7, Price/Sales of 2.2 compares to a 5yr average 2.3, and Price/Cash Flow of 9.7 compares to a 5-year average of 12.8.
  • Analysts see Juniper with 11 Buy, 12 Hold, and 2 Sell ratings. (source: MarketBeat.com)
  • Insiders have sold 676,625 shares the last three months and 3,477,158 shares in the past year. (source: NASDAQ.com) Juniper’s stock buyback program from March 2014 of $2 billion reduced the float 16%. The company hasn’t announced another buyback.
  • Juniper Network’s results are compared to networking and communication companies, such as F5 Networks (FFIV), Riverbed Technology (RVBD), Ciena (CIEN), Palo Alto (PANW), Arista Networks (ANET), Aruba Networks (ARUN), Cisco (CSCO) and Alcatel-Lucent (ALU).
  • Juniper shares have a 1-day average price change on earnings of 6.87%. Options are pricing in an implied move of 4.59% off earnings.

Recent News

  • 04/04: Berenberg likes Juniper in a report (200-plus pages) about enterprise technology and how it is being overtaken by cloud computing. Juniper is an “under-appreciated operational turnaround,” is somewhat protected from cloud changes thanks to its telecom customer base, according to a post by Barron’s.com.
  • 04/03: Instinet reiterated a Buy rating on Juniper citing a belief that the introduction of the QFX 10k will push the company over this target in 2017 and thus model 15% growth in switching. Consensus models 9%, according to a post by Barron’s.com.
  • 03/10: Cowen & Co. reiterated a Market Perform rating on Juniper citing the “impressive, strong growth” in the Web 2.0 Cloud Titan and Data Center switching market, and management’s upbeat commentary on business trends, but warns that Juniper’s traditional service and routing market faces challenges, according to a post by Barron’s.com.
  • 02/06: Juniper Networks’ chief technology officer, Pradeep Sindhu, plans to relinquish his position in order to spend more time on a startup, according to a post by Barron’s.com.

Technical Review

Juniper has been somewhat trendless the last decade but has shown some life every 4 years, so 2015 kept the cycle going but the November 4, 2015 high of $32.39 was somewhat disappointing. 2007 tested over $36 and 2011 reached $44. Point and figure charts show a lot of support but a move back down to $22 would re-enter the previous consolidation area that goes down to $15. (Chart courtesy of StockCharts.com)

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Summary

Juniper has undergone some restructuring of their operations and faces intense competition in the cloud segment and security areas. The company now has to find a new CTO. Insider selling picked up since last summer. The company had beaten/missed analyst earnings consensus by an average of 3c the past four quarters. Estimize consensus for a Non-GAAP EPS $0.45 on revenue of $1.22 bln compares to analyst consensus for a Non-GAAP EPS $0.42 on revenue of $1.20 bln. Next quarter’s guidance is of interest, as well.

 

 

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