Juniper Networks, Inc. (NYSE:JNPR) stock is breaking out from the solar wind that’s pushing the Dow Jones Industrial Average down 70 points to reach interstellar levels. In fact, JNPR stock is up more than 12% at the time of this writing.
The catalyst was a boffo earnings report after the close on Tuesday, with a beat on both the top and bottom line. Where analysts looked for 52 cents a share on $1.25 billion in sales, JNPR brought in 58 cents per share on $1.29 billion.
Juniper stock holders definitely needed this boost, as JNPR stock has floundered this year and the company was awash in National Security Agency headlines concerning its firewalls and unauthorized code for spying on communications. Year-to-date, shares were down 14% through Tuesday, and remain 4% in the red even after today’s pop.
Good thing Juniper stock really delivered the goods.
JNPR Stock Earnings Rundown
Not only did JNPR report a solid quarter, it guided for continued outperformance in the fourth quarter. According to Bernstein analyst Pierre Ferragu, Juniper’s success was buoyed by its suite of cloud-computing clients, or in Ferragu’s words, “large Internet companies running giant datacentres and complex network infrastructures.”
“The company owns a high-end technology platform, which leveraged in the relevant use cases and to the right clients who will truly value its technological superiority, can drive continued revenue growth and earnings growth,” said Ferragu. “From that perspective the stock remains attractively valued and we reiterate our outperform rating.”
Crucially, Juniper’s fourth-quarter guidance came in comfortably above the midpoint range and above “normal seasonality.” JNPR expects its topline to grow some 5% sequentially to $1.35 billion and earnings in the range of 59 cents to 65 cents. Analysts expect $1.18 billion in sales and per-share earnings of 44 cents.
A sore spot, however, was Juniper stock’s gross margin, which came in on the low side and will continue to operate near Q3 levels for the near-term. But as Bernstein’s Ferragu notes:
“A single point of gross margin doesn’t mean much in this complex global business, so we feel comfortable with the company guiding in the near term at 63% … as long as it doesn’t come down further and as long as the longer term 64% target is maintained.”
Bernstein gives Juniper stock a $30 price target and an “outperform” rating, citing its ability to drive strong financials through its profitable IP routing, Switching and Security businesses.
An upside of 15% is nothing to scoff at, especially when it’s only 13 times Bernstein’s 2017 earnings estimates. Ol’ Juniper may just finish the year in the black after all.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
