Juniper Networks Analyst Roundup

Juniper Networks, Inc. JNPR 3Q 2014 earnings results disappointed investors with net revenues falling and the company guiding lower for 2015.

The company’s shares fell after the announcement and drifted lower Friday, trading at $18.98 in the afternoon, down 6.59 percent.  Year-to-Date the stock is down 15.42 percent.

Analysts were consistent in their view that the company faces numerous challenges with declining revenue likely in 2015.

Below are highlights of what analysts thought about the company, along with current ratings and price targets.

Bank of America Merrill Lynch - Neutral, $25 price target

We see a few challenges across Juniper's product portfolio. Routing is suffering from deflationary pressures on both pricing and units. The edge routing segment has just completed a big deployment cycle and US carriers will likely first absorb some of the recent purchased capacity. Switching is another difficult area where Juniper needs to find its competitive edge vs. Cisco and Arista as well as address tougher comps in the coming quarters. Finally, we see similar challenges in the competitive security environment.

Credit Suisse - Neutral, $21 price target

Juniper's guidance points to a further deceleration in revenue growth and the results are concerning. We believe there remains a concern that the main routing business faces secular pressures. As such, in spite of new management approach to costs and more shareholder friendly returns, we further lower FY14 EPS estimates by 2.2 percent, to $1.38, but increase FY15 by 6.0 percent, to $1.76, to reflect lower share count.

Deutsche Bank - Hold, $19 price target

JNPR is likely to see a “long winter” in telco edge and core router upgrades, impacting their near to mid-term routing growth prospects – factored into to our lowered Q4/14 and FY15/16 estimates. The $160M/yr opex cuts and $2B in buyback targets are mostly priced in to the stock. We think JNPR needs to focus their new products and sales strategy on higher growth opportunities...so as to systematically lower their exposure to Q/Q volatilities in telco cycles and grow topline above the mid single digit routing market.

Morgan Stanley - Equal-weight, $22 price target

Facing increasing revenue pressures, US service providers are shifting spend priorities in order to best utilize capex budgets. While gross budgets have generally stayed about flat to slightly up in 2014, spending on density (e.g. DAS, small cell, base stations) and spectrum has taken priority to upgrade core and metro infrastructure. As a result, Juniper, which derives nearly 50 percent of their revenue from US SPs, has experienced a revenue slowdown. While the company thinks this will reverse in the 2H of next year, we think that spending to densify coverage could potentially take priority to core/metro upgrades for a more sustained duration. As a result, we are now expecting 15 rev to be below 14.