North America

Earnings Preview: Juniper Networks Q4 2016 (JNPR)

By: Craig Bowles

Overview

Juniper Networks, Inc. (JNPR) is slated to report 4Q 2016 earnings after the bell on Thursday, January 26th. 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 $0.59 to $0.65. The Street estimate is $0.63 (range $0.58 to $0.66). (source: Yahoo!.com) Consensus was $0.60 three months ago.
  • Revenues: Company guidance is $1.32 bln to $1.38 bln. Analysts expect an increase of 2.8% y/y to $1.36 bln (range $1.34 bln to $1.37 bln). Consensus was $1.33 bln three months ago.
  • Adjusted Earnings Per Share (EPS) Guidance for 1Q2017: The current Street estimate is $0.45 (range $0.40 to $0.50).
  • Revenue Guidance for 1Q2017: The current Street estimate is up 8.6% y/y to $1.19 bln (range $1.14 bln to $1.24 bln).
  • Juniper’s Price/Book of 2.2 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 12.0 compares to a 5-year average of 12.8.
  • Analysts see Juniper with 11 Buy, 15 Hold, and 3 (1 last qtr) Sell ratings. (source: MarketBeat.com)
  • Insiders have sold 1,764,429 shares the last three months and 3,077,214 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 6.86%. Options are pricing in an implied move of 7.12% off earnings.

Recent News

  • 12/08: Nomura upgraded Juniper Networks to Buy from Neutral citing the prospect “Juniper’s new QFX family of data center switches is set to grow rapidly in 2017,” which could “drive consensus up through 2017,” according to a post by Barron’s.com.
  • 11/16: Goldman Sachs added Juniper to the firm’s “Conviction List,” citing newer network switching products that can “drive meaningful upside to estimates and re-accelerate top- and bottom-line growth into 2017,” according to a post by Barron’s.com.
  • 11/01: Morgan Stanley downgraded Juniper to Underweight citing lost leverage of Ericsson’s and Nokia’s services organizations when Ericsson partnered with Cisco and Nokia acquired Alcatel, according to a post by Barron’s.com.
  • 10/25: Juniper’s CEO Rahim expects to take share from Cisco and Arista in areas of higher-speed switching, 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 technicians have a bullish price objective of $43.00 and their uptrend line is at $23. (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. 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 $0.65 on revenue of $1.368 bln compares to analyst consensus for a Non-GAAP EPS $0.63 on revenue of $1.36 bln. Next quarter’s guidance is of interest, as well.

 

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