Juniper Networks: Color on Quarter
* Needham notes Juniper's new mgmt team is promising action to cut costs and return capital to shareholders. There could be upside to estimates from these actions. The quarter was strong with strong Service Provider orders and a solidly above 1.0 B-B.
* Oppenheimer notes Juniper reported strong Dec-Q results beating top- and bottom-line targets. Demand was broad-based with sustained mid-teens growth in routing, record growth in switching (+36% YoY), and a third consecutive quarter of sequential improvement in security. While 1Q14 guidance is somewhat more seasonal than usual, they believe Juniper baked in some level of conservatism. The more important take is that Juniper's new CEO appears more open to aggressive change and will announce an "Integrated Operating Plan" in the coming weeks. They suspect the plan would closely mimic the proposal put forth by activist investor Elliot Management, with an aggressive combo of OpEx cuts/buybacks. With key headwinds addressed and catalysts ahead, Outperform.
* FBR Capital notes Juniper's 4Q13 results revealed a company with steady fundamental growth driven by some of the most robust sources of demand in the sector: webscale and MSOs. Carriers like T and VZ once again each contributed less than 10% of Juniper's revenues, having been replaced by an arguably more diversified, but often less consistent client base of webscale and cable cos. Mgmt indicated that bookings were up for the third consecutive quarter to a record $471M, while book-to-bill was >1, demonstrating demand is re-accelerating. While Juniper's business appears to be gaining momentum, they view the details of management's integrated operating plan and consistent execution as the necessary ingredients to get this stock moving higher.
* RBC is raising their tgt to $28 from $26. Juniper's taking an open approach to narrowing its focus, cutting costs and improving its cost structure and the timing might work for the new CEO, considering we're currently in a router upgrade cycle. Provisionally, our CY15 EPS increases to $1.65 vs. $1.60 previously; they estimate that a 10% head-count reduction may drive CY15 EPS closer to $2.20.
* Mizuho notes Juniper beat 4Q13 consensus expectations on better switching sales. The in-line to slightly better outlook was driven by strong bookings in routing, up over 30% Y/Y - that trend suggests service provider spending is due to improve in 1Q14. New management indicates it plans to provide a detailed operating plan centered on innovation and cost structure, with a capital return program within the next few weeks - providing an additional tailwind for shares.
* Goldman, William Blair and Barclays upgraded the stock this AM.
- GS : Raised JNPR to Neutral from Sell, price target: $25