- Oops!Something went wrong.Please try again later.
Juniper Networks, Inc. JNPR is gaining from strong momentum across its core industry verticals and is confident of its long-term prospects. Investments in customer solutions and sales organizations have enabled it to capitalize on improving end-market conditions.
Shares of this Sunnyvale, CA-based leading provider of networking solutions and communication devices have gained 31.1% in the past year compared with the industry’s growth of 23.9%. With four upward revisions, earnings estimates for the current year have increased from $1.71 per share to $1.72 in the past 60 days.
Image Source: Zacks Investment Research
Let us find out why this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Factors Favoring Juniper
Juniper offers a broad range of routing, switching, and security products. Routing includes products and services from the E, M, MX, PTX, T Series, and ACX router families. The company develops, designs, and sells products that help to build network infrastructure used for services and applications based on single Internet protocol network worldwide.
It caters to the networking needs of enterprises, public sector organizations, and service providers across the globe. Juniper is focused on reinforcing its supply chain to enhance its resiliency and limit disruptions. It is witnessing encouraging trends across various areas of its business including solid momentum in Mist Systems and strength in the services organization.
Also, it has made significant changes to the go-to-market structure to better align sales strategies to each of its core customer verticals. The company believes the 400-gig upgrade cycle, 5G deployment, and enterprise multi-cloud initiatives hold huge opportunities where it is well-positioned to benefit over the next several years.
The company is likely to gain from the higher spending pattern among carriers to upgrade their networks and support the incremental growth in data traffic. Increased spending from AT&T Inc. T and Verizon Communications Inc. VZ, Juniper’s two customers, is expected to aid its top line.
Headwinds Affecting the Stock
Juniper faces intense competition in each of its served markets especially from industry leader, Cisco Systems, which has traditionally spearheaded innovation, charging higher prices for its premium branded products and expanding margins.
Despite having a strong security portfolio (SRX Platform & Security Software, Screen OS, and other Legacy products), Juniper has not been performing well for the past few quarters due to lower-than-expected demand for non-Junos-based security products. Poor performance by the Junos business prompted the company to sell off the mobile security unit.
Also, due to the worldwide shortage of semiconductors, Juniper is experiencing component scarcity, which is resulting in extended lead times of certain products and elevated costs. Uncertain macro environment and weak investment patterns among carrier customers are headwinds. High operating expenses pose an additional challenge.
Stock to Consider
A better-ranked stock in the industry that investors may consider is InterDigital, Inc. IDCC, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
InterDigital delivered a trailing four-quarter earnings surprise of 536%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AT&T Inc. (T) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
InterDigital, Inc. (IDCC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research