Through The Fly's Eyes: Juniper Networks
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Specialists in Computer Network Infrastructures
Whether it's over the Internet, or through the office network, getting the right computer signal to the right place is a matter most of us liken to magic. One of the world's best known performers of such legerdemain is headquartered in Sunnyvale, California.
Juniper Networks (JNPR) is engaged in the design, development and sale of Internet Protocol routers. These enable service providers and other network-intensive businesses to support and deliver services and applications on an integrated network. Other offerings include network traffic management software, virtual private network appliances, application acceleration platforms and firewall devices. Customers include wireline, wireless, and cable operators; Internet content providers; general businesses; and public agencies. McDonald's (MCD) and Dow Chemical (DOW) are among the firm's enterprise customers. Alcatel-Lucent (ALU), Cisco Systems (CSCO) and Nortel Networks (NT) are competitors.
The company pleased investors last week, when it reported Q2 EPS of 20 cents and revenues of $664.9 million. Analysts had been expecting 20 cents and $649.5 million. Management also guided Q3 EPS to 21 cents (21 cent consensus), Q3 revenues to $695-715 million ($674.56M consensus), FY07 EPS to 82-83 cents (81 cent consensus) and FY07 revenues to $2.73-$2.76 billion ($2.67B consensus).
The stock popped on the news and is now forming a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with five "strong buys", eight "buys", fourteen "holds" and one "sell". Analysts see a 28% growth rate, through the next year. The JNPR Price to Book ratio (3.66), Price to Free Cash Flow ratio (28.22), Sales Growth rate (17.17%) and EPS Growth rate (106.96%) compare favorably with industry, sector and S&P 500 averages.
The stock is one of those used to calculate the S&P 500 Index, the Nasdaq 100 Index and the AMEX Internet Index. Institutional investors hold about 85% of the outstanding shares. Over the past 52 weeks, JNPR has traded between $12.09 and $31.20. A stop-loss of $26.60 looks good here.