Juniper Networks connects traders with worth

We love Juniper Networks (NYSE: JNPR) for a lot of causes and consider the inventory is poised to rise. Not solely is it nicely positioned as a networking chief, it is also gaining relevance within the cloud, and it is the most effective dividend-paying shares within the tech trade.

April 28, 2021

4 min learn

This story initially appeared on MarketBeat

Juniper Networks is able to bounce larger

We love Juniper Networks (NYSE: JNPR) for a lot of causes and thinks the inventory is able to go larger. Not solely is it nicely positioned as a networking chief, it is also gaining relevance within the cloud, and it is the most effective dividend-paying shares within the tech trade. Based mostly on the surge in digital utilization over the previous 12 months, the dominant presence of e-commerce, and the traits we’re seeing in different areas of expertise, the corporate ought to be capable to to assist its development with out devoting a lot effort to it and it devotes efforts to it. .

“The momentum is robust at the beginning of the June quarter and we’re assured about our development prospects. We consider that the success we’re seeing is the results of the deliberate steps we’ve taken to strengthen our product portfolio and our go-to-market group, each of which permit us to make the most of engaging end-market alternatives, now and sooner or later, ”stated Juniper CEO Rami Rahim.

Juniper Networks expands and elevates its recommendation, too

Juniper Networks income within the first quarter isn’t just beat the consensus estimates of 100 foundation factors, however elevated 7.2% over final 12 months. Power was pushed by demand throughout all product classes with notable power in cloud and enterprise options. On a sector foundation, revenues elevated 10.4% whereas companies had been down 3.3%. Relating to the cloud, cloud-centric income grew 30% whereas enterprise demand elevated 20% throughout all classes. Income and earnings might have been higher, nonetheless, with out the worldwide microchip scarcity and provide chain disruptions.

Taking place the report, the corporate posted a slight lower in its margins in comparison with the This autumn 2020 interval, however once more it was beneath expectations. Margins are beneath strain from varied elements together with provide chain points, rising prices and product combine, with at the very least provide chain points and product combine anticipated to enhance additional. late within the 12 months. Regardless, adjusted working margin is up 200 foundation factors from a 12 months in the past to assist drive each adjusted earnings development and above consensus earnings.

In the long run, BPA GAAP missed expectations as a consequence of unexpected and non-comparable one-time prices, however not adjusted revenue. On an adjusted foundation, the corporate produced $ 0.30 in EPS or $ 0.07 greater than final 12 months and a nickel forward of consensus.

Trying forward, the corporate expects sequential development to select up with the following quarter, and for the total 12 months, to supply robust year-over-year good points. The second quarter forecast factors to income within the order of $ 1.14 billion in opposition to the consensus of $ 1.12 and for EPS in a variety with the midpoint above the consensus. That is already resulting in a collection of hikes within the analysts’ worth goal, however up to now no motion on the consensus notice which remains to be pending. The consensus worth goal among the many three most up-to-date is close to $ 2.7.25, up about 10%.

Juniper is undervalued and excessive yielding

Juniper is undervalued at simply 15 occasions revenue this 12 months and 13 occasions subsequent. The S&P 500 is buying and selling nearer to 22 occasions its earnings and different prime quality dividend payers within the tech sector are buying and selling rather more (with decrease yields). Relating to yield, the inventory pays round 3.15% with shares buying and selling near $ 25 and that is safe fee. Not solely does the corporate decide to paying for the distribution, it has the cash to take action. The payout ratio is lower than 50% of earnings, earnings are rising and the steadiness sheet is in nice form. The corporate is nicely capitalized even after the investments remodeled the previous 12 months and has low leverage and good protection. Add to {that a} tendency to extend the payout yearly at a fee of 15% and we predict Juniper may be very engaging to traders centered on dividend development.

The technical outlook: Juniper falls again on a shopping for alternative

Juniper’s shares began the day larger on robust earnings and a bullish outlook, however had been unable to take care of the good points. As of midday, shares had been down round 1.0% and buying and selling at a key and psychologically vital assist stage. Assist is current on the $ 25 stage and might last as long as bulls can rally once more. In any other case, we see this inventory drop to the $ 24.50 or $ 25 stage earlier than the consolidation and rebound. Both method, we predict Juniper is a purchase.

Featured article: Intrinsic worth

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