Shares of Juniper Networks (JNPR) fell 68 cents, or 3%, today to $21.69 after a offering a disappointing Q1 forecast last night, as analysts debate the seriousness of the malaise in equipment sales the company is grappling with.
The stock received three downgrades today, from Stifel Nicolaus, Auriga USA LLC, and Morgan Keegan.
The commentary from bulls on the stock is cautious, thick with uncertainty and lacking the kind of robust defense offered for Riverbed Technology (RVBD) today.
Bullish!
Brent Bracelin, Pacific Crest: Reiterates an Outperform rating and a $24 price target, though he warns there’s also the potential for downside to $17. He writes that he’s “hanging on to hope of a second-half [2012] recovery.”? “We are maintaining our Outperform rating despite meaningful near-term downside risk. We see potential for a 2H rebound driven by a robust arsenal of new products. [...] Clearly the degree of caution around Q1 has overshadowed many if not most of the key metrics from Q4, which are now less relevant. The bull thesis now hinges on a recovery in service-provider router orders in the second half.” About that recovery, Bracelin admits there is “limited visibility.” Bracelin cut his estimate for this year’s results to $4.43 billion in revenue and $1 per share in profit, down from a prior estimate of $4.52 billion and $1.20 per share.
Tim Long, BMO Capital Markets: Reiterates an Outperform rating, while cutting his price target to $24 from $25. “On the bright side, we believe that the backlog has increased by $200+ million over the last two quarters, which should help results in 2Q and/or 3Q. The T4000 is just starting to ship, and there could be some pent-up demand. Services and Enterprise both performed well the last few quarters, and look solid into 2012.” Long cut! his 201 2 EPS estimate to 89 cents from $1.05.
Bearish!
Sanjiv Wadhwani, Stifel Nicolaus: Cut his rating to Hold from Buy. The outlook “leaves us with little to defend our Buy thesis.” “Q4 product gross margins declined 3.4% to 64.2%. Product gross margins have declined in each of the last three quarters from 70.6% in Q1 to 64.2% in Q4. This brings into question whether there is pricing pressure in the market (from Cisco and Huawei) and whether the margin profile of the routing industry has permanently changed. In fact, Cisco on numerous occasions has suggested that it will not walk away from deals where pricing becomes an issue, and has guided for routing gross margins to decline over the next 3 years.” He cut his 2012 forecast to $4.3 billion and 79 cents from a prior $5 billion and $1.45.
Sandeep Shyamsukha, Auriga: Cut his rating to Hold from Buy, and trimmed his price target from $26 to $23. Juniper could “bounce back” in the latter part of this year on carrier spending by Verizon Communications (VZ) and AT&T (T), but that’s not sufficient to buy the stock. “While we continue to like JNPR��s positioning in routers, we would wait for more clarity on service provider spending and/or new product momentum before becoming more constructive on the stock.” Shyamsukha cut his estimate for this year to $4.33 billion and 98 cents from a prior $4.73 billion and $1.30.
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