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Deutsche Bank’s Vijay Bhagavath believes Juniper Networks, Inc. (NYSE: JNPR) is likely to witness margin pressure and market share loss at its Routing business during FY17/18.
Bhagavath downgraded the rating on the company from Buy to Hold, while lowering the price target from $30 to $22.
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Competitive Routing Market
The analyst expects Juniper Networks’ routing business to be impact by price competitive merchant silicon routers for Next Gen Networking refresh across various platforms.
However, Bhagavath remained constructive on the longer-term outlook for the company, “noting potential for JNPR to introduce next-gen custom silicon routers in FY18+ that could partially offset the share loss and margin erosion trends.”
Margin Pressure And Share Loss
The analyst’s Scenario Analysis model points toward a decline in headline growth, operating margins and gross margins at the Routing business in FY17/18.
Bhagavath expects Juniper Networks to generate top-line growth in the 2.5 percent range for FY17/18, with headline EPS missing the current consensus forecasts.
Although industry data implies an Edge Routing market in the range of $8–$10 billion in 2017, with mid-single digit top line growth, merchant silicon routers from competitors could capture the first $1–$2 billion of the Service Provider Edge Routing market in 2017/18.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.