Juniper Gets Up the Hill Like the Little Engine That Could
Shares of networking equipment company Juniper surged in late trading yesterday, after its quarterly results turned out to be better than what analysts had expected. Sales were $1.03 billion, beating a consensus forecast of $977 million; profit was 16 cents a share versus a 13-cent consensus.
When the company posted its earnings press release early by mistake before markets had closed, word of the beat encouraged traders to rush in and buy. The shares rose by 7 percent initially, and went as high as $22.20 per share after opening at $20.19.
Telecom carriers are again spending to build out and improve their networks, and that makes Juniper the Little Engine That Could, writes ISI analyst Brian Marshall in a note to clients today. Investments in wireless LTE (Long Term Evolution) networks are bringing carriers “back to the trough,” he wrote. “Carriers are searching for ways to stabilize their capital expenditures, reduce network cost per bit and increase average revenue per user.”
And so they’re turning to Juniper, which makes about two-thirds of its revenue from service providers. Marshall writes that, in the quarter, Juniper accounted for about 10 percent of Verizon’s capital spending; up from about 5 percent last quarter. “Even in the face of ‘stable’ CapEx budgets, we believe Juniper can flourish over the next several quarters as carriers re-allocate priorities. Marshall rates Juniper a “buy,” with a target price of $30.
Update: And apparently the Little Engine is headed back down the hill. Juniper shares are falling, and are down almost 7 percent to $20.22 as of 10:30 am ET, which is right back where it started yesterday.