Market Overview

Juniper's Cloud 'Stall' Prompts BMO Downgrade

Share:
Juniper's Cloud 'Stall' Prompts BMO Downgrade
Related JNPR
A Look At Robyn Denholm, The Woman Who Will Replace Elon Musk As Tesla Chair
A Preview Of Juniper Networks Q3 Earnings
Finjan -5% after jury sides with Juniper (Seeking Alpha)

Juniper Networks, Inc. (NYSE: JNPR) reported preliminary second-quarter earnings Thursday and third-quarter guidance that signals a "stall" in the cloud business, according to BMO Capital Markets. 

The Analyst

Analyst Tim Long downgraded Juniper Networks from Outperform to Market Perform with a price target lowered from $30 to $27.

The Thesis

Juniper's preliminary earnings report was "solid" and highlighted by a revenue beat and outperformance in all product categories including Services, which would have grown if not for a negative impact from ASC 606, Long said in the downgrade note. (See the analyst's track record here.) 

Revenue and margin guidance for Q3 was disappointing, and looking beyond the headline numbers shows problems with the cloud business, the analyst said. 

While cloud revenue was higher in the reported quarter, push-outs will cause a shortfall in Q3, Long said. A lack of visibility into the cloud business for the next few quarters makes it unclear when revenue growth will return once the transition from the MX to the PTX router is complete, he said. 

A shift in priority to the cloud prompted a slowdown in the switching segment after two years of double-digit growth, the analyst said. A rebound in the security business in Q2 is appreciated, but the unit only accounts for 7 percent of total revenue, he said. 

Price Action

Juniper shares were trading down 9.75 percent to $25.50 Friday morning. 

Related Links:

Juniper Networks Faces 'Ongoing' Business Pressures, Credit Suisse Says

BofA Says It's Time To Connect With Juniper Networks, Projects Multiple Positive Catalysts

Photo courtesy of Juniper Networks. 

Latest Ratings for JNPR

DateFirmActionFromTo
Nov 2018CitigroupMaintainsNeutralNeutral
Sep 2018UBSInitiates Coverage OnNeutral
Sep 2018NomuraUpgradesNeutralBuy

View More Analyst Ratings for JNPR
View the Latest Analyst Ratings

Posted-In: ASC 606 BMO Capital Markets cloud Tim LongAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (JNPR)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
DESPKeyBancInitiates Coverage On0.0
MELIKeyBancInitiates Coverage On0.0
ALBKeyBancMaintains120.0
AVNSKeyBancMaintains67.0
ABTCredit SuisseInitiates Coverage On82.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

GDP Notches Strongest Growth Since 2014

Stifel Doubles Down On MEI Pharma, Considers ME-401 'Best-In-Class'