Cantor Fitzgerald analyst Brian J. White rates Juniper Networks, Inc. (NYSE:JNPR) as a Buy, as the company posted better than expected 4Q:13 results.

Juniper Networks

Last night, Juniper Networks, Inc. (NYSE:JNPR) reported 4Q:13 results that exceeded our estimates and the Street. We felt the tone of the conference call was refreshingly constructive and Juniper’s new CEO (Shaygan Kheradpir) announced the early-stage development of an “Integrated Operating Plan” with details anticipated to be unveiled in the coming weeks. Given Juniper’s attractive valuation (12.2x our CY:15 EPS estimate, ex-cash), continued investor skepticism around the name, recent shareholder enhancement proposal from Elliott Management and Juniper’s Integrated Operating Plan in the works, we believe Juniper Networks has attractive upside over the next 12 months and we are raising our 12-month price target to $35.00 (from $30.50).

A strong finish to 2013 for Juniper Networks

Last night, Juniper Networks, Inc. (NYSE:JNPR) reported 4Q:13 sales of $1.274 billion that handily beat our $1.231 billion estimate (FactSet Consensus was at $1.223 billion), while pro forma EPS of $0.43 was above our $0.37 projection (Consensus was also at $0.37).

Operating margin up sequentially

Juniper Networks, Inc. (NYSE:JNPR)’s operating margin of 21.9% was up strongly from the 18.2% delivered a year ago in 4Q:12 and above the 19.8% in 3Q:13 but lower than our 22.3% projection. Netting this out, operating profit in 4Q:13 of $278.3 million was above our $274.4 million estimate.

Big uptick in enterprise

During 4Q:13, service provider revenue grew by 5% QoQ and contributed 65% of sales, while enterprise revenue increased by 12% and contributed 35% of revenue. Routing sales grew by 1% QoQ and security increased by 9%, while switching jumped by 35%. Sales in EMEA (28% of sales) grew by a robust 17% QoQ, while APAC (18%) increased by 5% and Americas (54%) grew by 4%.

Raising 2014 EPS estimate for Juniper Networks

Looking into 1Q:14, Juniper Networks, Inc. (NYSE:JNPR) expects sales of $1.12-1.16 billion (Consensus is at $1.141 billion) and pro forma EPS of $0.27 to $0.30 (Consensus is at $0.29). We are tweaking our 1Q:14 sales projection to $1.160 billion from $1.189 billion but are maintaining our EPS estimate at $0.29. For 2014, we are slightly raising our EPS estimate to $1.49 from $1.45.


We are raising our price target to $35.00 from $30.50, which is based on just over 17x our CY:15 pro forma EPS estimate (adjusted for interest income/expense), plus Juniper Networks, Inc. (NYSE:JNPR)’s net cash per share of $6.31.