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Juniper Networks, Inc. Just Reported Full-Year Earnings: Have Analysts Changed Their Mind On The Stock?

Last week, you might have seen that Juniper Networks, Inc. (NYSE:JNPR) released its annual result to the market. The early response was not positive, with shares down 6.8% to US$22.76 in the past week. Juniper Networks reported US$4.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.99 beat expectations, being 3.8% higher than what analysts expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Juniper Networks

NYSE:JNPR Past and Future Earnings, January 30th 2020
NYSE:JNPR Past and Future Earnings, January 30th 2020

Following last week's earnings report, Juniper Networks's 20 analysts are forecasting 2020 revenues to be US$4.50b, approximately in line with the last 12 months. Statutory earnings per share are expected to ascend 17% to US$1.17. Yet prior to the latest earnings, analysts had been forecasting revenues of US$4.50b and earnings per share (EPS) of US$1.24 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$25.28, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Juniper Networks, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$19.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Juniper Networks shareholders.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Juniper Networks's past performance and to peers in the same market. From these estimates it looks as though analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past five years have seen sales shrink five years annually. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 3.4% next year. So it's pretty clear that, although revenues are improving, Juniper Networks is still expected to grow slower than the market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Juniper Networks. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Juniper Networks going out to 2022, and you can see them free on our platform here.

We also provide an overview of the Juniper Networks Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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