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The Zacks Analyst Blog Highlights: Juniper Networks, Verizon, AT&T, Cisco Systems and Enstar Group

Zacks Equity Research

For Immediate Release

Chicago, IL – June 7, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Juniper Networks Inc. (JNPR), Verizon (VZ), AT&T (T), Cisco Systems Inc. (CSCO) and Enstar Group Limited (ESGR).

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Here are highlights from Thursday’s Analyst Blog:

Higher Telco Spending to Benefit Juniper


Networking solutions provider Juniper Networks Inc. (JNPR) shares rallied 6.61% following the company’s Chief Executive Officer (CEO) Kevin Johnson’s positive commentary on better spending signs from the telecom companies.

Yesterday, Johnson met with the analysts of BofA Merrill Lynch, where he mentioned that the company was doing well in the service provider vertical due to improving demand in the U.S. He also said that the substantial increase in network traffic is pushing service providers to improve their network capacities, which was translating to improving demand at Juniper. While these comments were in line with the guidance announced during the first quarter earnings call, Johnson provided some color on the reasons for his optimism.

Service providers are basically pushing to increase the efficiency of their networks and introduce new services for customers. They are therefore likely to transition legacy networks to IP packet switch networking and also deploy technology that will help service delivery. This is where management believes that Juniper’s solid portfolio, deep relationships and newfound agility will help garner new business.

Juniper is prudently investing in its routing and switching portfolio. Despite its recent restructuring efforts, roughly half its workforce consists of engineers who are working to upgrade its portfolio and make it more efficient and powerful. Hence, service providers are likely to continue spending on its advanced routers and switches thereby.

We remain encouraged by Juniper’s solid performance in its Service Provider unit. Juniper reported Service Provider revenues of $712.9 million, up 4.0% year over year. The improvement in Service Provider revenues was mainly attributable to healthy demand from large U.S. customers, offset by weakness in APAC and EMEA spending. Juniper continued to witness strength in tier 1 service providers such as Verizon (VZ) and AT&T (T) that were 10% customers for the company during the quarter.

Though Juniper’s constant deal wins, new product launches, focus on cost reduction initiatives are positives, stiff competition from Cisco Systems Inc. (CSCO) and soft contributions from the Enterprise sector keep us concerned.

Currently, Juniper has a Zacks Rank #3 (Hold).


Enstar Group Upgraded to Strong Buy

On Jun 5, 2013, Zacks Investment Research upgraded Enstar Group Limited (ESGR) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Enstar Group posted strong first quarter 2013 results on May 10. Non-GAAP earnings per share came in at 72 cents, surpassing the Zacks Consensus Estimate of 40 cents by 80% and the year-ago earnings of 24 cents by 24%.

Earnings were primarily aided by solid top-line growth that improved almost 70%.

Moreover, this multi-line insurer delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 17.3%.

Recently, Enstar inked a deal with Arden Holdings Limited to buy Atrium Underwriting Group Limited and Arden Reinsurance Company Limited for about $263 million. Atrium is an underwriting business at Lloyd's of London.

While Atrium provides insurance coverage for accident and health, aviation, marine property, professional liability, upstream energy, among others, Arden Reinsurance provides reinsurance to Atrium. Enstar will benefit from its experienced underwriting and management team to leverage its growth prospect.

Previously, the company also closed the acquisition of Household Life Insurance Company of Delaware and HSBC Insurance Company of Delaware from Household Insurance Group Holding Company, an affiliate of HSBC Holdings plc.

It had written various U.S. and Canadian life insurance, including credit insurance, term life insurance, assumed reinsurance, corporate owned life insurance, and annuities. This buyout of closed-life insurance business further leverages Enstar’s run-offs portfolio.

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