Juniper Snaps Up 128 Technology For $450M To Bolster AI-Portfolio
Juniper Network has inked an agreement to acquire 128 Technology, a Massachusetts-based company, for $450 million.
The acquisition is expected to enhance Juniper’s (JNPR) Artificial Intelligence or AI-driven enterprise network portfolio by bringing together 128 Technology’s Session Smart networking with Juniper’s campus and branch solutions driven by Mist AI. Juniper aims to lead the industry transformation from network-centric SD-WANs (software-defined wide area networks) to user-centric AI-Driven WANs. Last year, the company acquired Mist Systems for $405 million.
128 Technology will be integrated into Juniper’s AI-Driven Enterprise business unit, which includes wired and wireless access and SD-WAN, all of which are driven by Mist AI.
“The acquisition of 128 Technology will enable Juniper to accelerate in a key area where we are seeing enormous success – the AI-driven enterprise,” stated Rami Rahim, CEO of Juniper Networks.
The company anticipates completing the acquisition in fiscal 4Q, subject to regulatory approvals. It expects the deal to be slightly accretive to revenue and gross margins, but dilutive to Non-GAAP EPS in fiscal 2021. However, the transaction is expected to be accretive to Non-GAAP EPS in fiscal 2022.
In reaction to the news of the proposed acquisition, Oppenheimer analyst George Iwanyc reiterated a Buy rating for Juniper with a price target of $28, saying “Overall, we're positive on the acquisition and believe 128 Technology can round out Juniper's campus switch and WiFi technology portfolio by adding native SD-WAN capabilities at a lower cost, better network/application visibility, enhanced security, and lower latency.”
“We note that this part of the market is quickly converging (switch, SD-WAN, and WiFi) with Juniper matching the same product evolution we've seen at Cisco and HPE. Near term, the key is product integration execution (within Juniper's Mist platform), which should be simplified by 128 Technology's software approach, while sales execution where Juniper's better scale should provide significant sales and go-to-market synergies.” (See JNPR stock analysis on TipRanks)
However, the Street has a cautious outlook on Juniper Networks with a Hold consensus based on 4 Buys, 5 Holds and 2 Sells. The average analyst price target of $24.60 indicates an upside potential of 11.5%. Shares have declined 10.4% year-to-date.
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