UKRAINE - 2021/03/17: In this photo illustration a Juniper Networks logo is seen on a smartphone and ... [+]
SOPA Images/LightRocket via Getty ImagesUp almost 50% from its low in March 2020, at the current price of $26 per share, we believe Juniper Networks stock (NYSE: JNPR) has further upside potential. Juniper Networks stock has risen from around $17 to $26 off its March 2020 bottom, much less than the S&P which increased by more than 80% from its lows. Further, the stock is up just around 10% from the level it was at before the pandemic, and we believe that Juniper Networks stock could rise more than 10% from its current price, to new levels above its early-2021 high of $28, driven by expectations of continuing demand growth and strong Q1 2021 results. Our dashboard What Factors Drove -9% Change In Juniper Networks Stock Between 2017 And Now? has the underlying numbers behind our thinking.
Stock Prices
TrefisThe stock price fall since 2017-end came due to a 12% drop in revenue from $5 billion in FY 2017 to $4.45 billion in FY 2020. Further, net margins dropped slightly from 6.1% to 5.8%, driving a 4% drop in EPS from $0.81 in FY 2017 to $0.78 in FY 2020, despite a 13% drop in the outstanding share count.
Juniper Networks’ P/E (price-to-earnings) multiple dropped from 35x in 2017 to 29x by 2020 end, but has since risen to over 33x, riding the rally in technology stocks. We believe that the company’s P/E ratio has the potential to rise further in the near term on expectations of continuing demand growth and a favorable shareholder return policy, thus driving the stock price higher.
Where Is The Stock Headed?
The global spread of Coronavirus and the resulting lockdowns have led to a surge in online activity, which has driven up demand for networking devices, such as routers, switches, and security products. This is evident from Juniper’s Q1 2021 results, where revenue came in at $1.08 billion, up from $998 million in Q1 2020, primarily driven by a 10% rise in revenue from the product segment. However, the company was unable to control COGS and operating expenses, with operating income dropping to $28 million vs $39 million in Q1 2020. EPS came in at -$0.10 vs $0.06 for the same period last year, but a closer look reveals that this was largely due to a $61 million debt extinguishment charge in Q1 2021.
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With economies opening up worldwide, we believe the company will continue seeing further revenue and margin growth in the medium term, as work from home becomes the new norm. This will raise investor expectations further, driving up the company’s P/E multiple. We believe that Juniper Networks stock can rise more than 10% from current levels, to set new highs above $28.
While Juniper Networks stock may be undervalued, it is helpful to know how its peers stack up. Juniper Networks Stock Comparison With Peers summarizes how Juniper Networks compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.
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The Link LonkMay 21, 2021 at 04:00PM
https://www.forbes.com/sites/greatspeculations/2021/05/21/product-demand-revival-could-send-juniper-networks-stock-to-fresh-highs/
Product Demand Revival Could Send Juniper Networks Stock To Fresh Highs - Forbes
https://news.google.com/search?q=Send&hl=en-US&gl=US&ceid=US:en
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