With the rising demand for data centers, the demand for networking products from companies such as Juniper Networks (JNPR) is also growing. Different companies (both large and SMB) across geographies are taking the help of data centers to provide support for their IT systems. This is fueling the growth in data centers.
The company recently won a deal from global Web hosting provider PEER 1. Juniper's integrated routing, switching and security technology is being used in PEER 1’s U.K. data center. This will likely provide the latter’s customers with carrier-grade performance, reliability and security.
The solution offered by Juniper will help PEER 1 lower server downtime in its flagship green data center in Portsmouth by approximately 33.0% over existing systems. This new facility offers Power Usage Efficiency (:PUE) scores that are better than the industry standard.
Juniper is a player in a fast-growing, emerging segment. According to a recent survey published by Gartner, $3.7 billion will be spent on global IT systems this year, which accounts for a 4.2% increase over the previous year. As for data centers, a total spend of $192 billion is expected, which accounts for a 4.5% increase from 2012. The increased spending represents double the growth the industry saw in 2012. What’s more, the research firm expects another 4.2% growth in fiscal 2014.
Again, as per research conducted by Cisco Systems (CSCO), the current data traffic in data centers is in the zettabyte range and by 2016 it is expected to quadruple to 6.6 zettabytes annually. So we believe that Juniper has ample opportunity for growth over the next few years.
The solid growth prospects make us positive about Juniper’s new product traction. The company is focusing on revenue growth as well as cost reduction initiatives, which are supported by reduction in headcount, improvement in the supply chain and procurement activities.
On the other hand, Juniper faces stiff competition from F5 Networks (FFIV), Ciscoand Alcatel-Lucent (ALU). We believe that Juniper is well-positioned in the networking space and could capitalize on much of the worldwide spending on information technology.
Currently, Juniper has a Zacks Rank #2 (Buy).
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