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Juniper Networks Buys Mist Systems For $405M: 2 Analyst Takes

Jayson Derrick

Networking developer Juniper Networks, Inc. (NYSE: JNPR) has reached an agreement to acquire Mist Systems, a cloud-managed wireless network solution company often described as "the Waze for Wi-Fi" for $405 million.

The Analysts

Piper Jaffray's James Fish maintains a Neutral rating on Juniper Networks with an unchanged $27 price target.

Morgan Stanley's James Faucette maintains at Underweight, unchanged $20 price target.

Piper Jaffray: 'Bold Move' Should Be Applauded

Mist Systems is among the few remaining standalone WLAN vendors and represents a "great" strategic fit under Juniper's control due to the rising importance of the Edge and the convergence of networking, Fish said in a Monday note.

Mist's business consists of an AI-driven WLAN platform that collects over 150 user states every few seconds and offers valuable insights from the information, the analyst said. 

While the near-term impact of the acquisition is neutral for Juniper, it has a long-term positive impact, as it strengthens the company's competitive positioning — and management should be applauded for the "bold move," Fish said. 

Before Piper Jaffray turns bullish, the company needs to properly execute on the acquisition, and the integration with existing products needs to play out, the analyst said. 

Morgan Stanley Sees Small Benefit

Juniper Networks' largest acquisition in more than a decade comes at a time when the company has shown an inability to capitalize on an inorganic strategy against much larger competitors like Cisco Systems, Inc. (NASDAQ: CSCO) which boasts $41 billion in cash and can consistently outbid for any asset on the market, Faucette said in a Monday note. 

Juniper's latest acquisition gives it exposure to the $6-billion wireless LAN market, which Cisco and other large-cap peers already have, the analyst said.

Juniper and Mist Systems have been selling products together through a partnership, so their products are already integrated, Faucette said. As such, any net benefit to Juniper will be marginally accretive in 2020 and beyond, he said. 

Aside from the acquisition, Juniper continues to face broader challenges in the enterprise market, including potential share loss, the analyst said, adding that a bearish stance continues to be justified.

Price Action

Juniper Networks shares were down 1.37 percent at $26.63 at the time of publication Tuesday.

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Latest Ratings for CSCO

Date Firm Action From To
Feb 2019 Credit Suisse Reiterates Neutral Neutral
Feb 2019 KeyBanc Maintains Overweight Overweight
Feb 2019 Citigroup Maintains Buy Buy

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