Network communications company Juniper Networks (NYSE:JNPR) stock has been chopping in a trading range for nearly a decade. The legacy networker has been profitable, consistent, with a war chest of $1.78 billion in cash or $5.44 cash per share and a 3.12% dividend. The Company has been quietly gobbling up companies to bulk up its portfolio of data center and networking services trading at 2X book value. While growth has slow, it’s become a value play for those seeking steady Eddie performance. The PE 33X is cheap compared to the industry average of 43X. The 5G rollout is a major tailwind that doesn’t seem to be priced in by the markets. As COVID vaccinations accelerate and workers return to offices, Juniper’s enterprise business should see a return to normalcy as it benefits as a re-opening play.
Q4 FY 2020 Earnings Release
On Jan. 28, 2021, Juniper reported its Q4 2020 results for the quarter ending December 2020. The Company reported earnings-per-share (EPS) of $0.55 versus consensus analyst estimates for $0.53, a $0.02 beat. Revenues grew 1.2% year-over-year (YoY) to $1.22 billion, beating analyst estimates of $1.19 billion by $300 million.
Juniper Flat Q1 2021 Guidance
Juniper issued flat guidance for Q1 2021 for EPS in the range of $0.20 to $0.30 versus $0.25 consensus analyst estimates. The Company expects revenues between $1.005 to $1.05 billion versus $1.03 billion. The Company expects non-GAAP gross margins to experience normal season patterns excluding impacts of COVID-related costs, non-GAAP gross margin is approximately flat YoY.
Conference Call Takeaways
Juniper CEO, Rami Rahim, set the tone:
“Focusing on our specific use cases, which include AI-driven enterprise, cloud-ready data centers and automated WAN with connected security embedded in each… We have reorganized our sales, product management and engineering teams around these business opportunities.”
He went on:
“Capturing the value presented by our recent acquisition and making sure 128 Technology, Apstra and Netrounds deliver similar returns on investment to what we are seeing with Mist, which continues to exceed expectations and it’s positively impacting sales of the broader Juniper portfolio.”
The Company seeks to capitalize on the major tailwinds of 5G and 400 gig, which can last for several years. Enterprise growth returned in December exceeding expectations with high single digit YoY growth in line with re-openings and COVID vaccinations.
Mist and 128 Technology Growth Engines
Juniper saw particularly strong demand in North America but was widespread throughout geographies:
“We secured a significant multi-year opportunity with an international global 10 account for our wireless, wired and SDRAM portfolio driven by our Mist AI differentiation.”
CEO Rahim foresees the enterprise business experiencing the fastest growth in 2021:
“Our optimism is fueled by the building customer response to our AI-driven enterprise offerings and specifically the momentum we are seeing around Mist, which saw logos grow by more than 125% year-over-year and orders increased by 140% year-over-year.”
Mist minimizes IT costs with proactive and self-routing automation assuring secure user experiences with AI-driven support and end-to-end service levels. Gartner recently listed Juniper in the Leaders Quadrant for wireless and wired access execution. Recently acquired 128 Technology will drive the next evolution of the AI-driven vision with superior application end-user SD-WAN experience while extending the value of Mist secure AI-engine and cloud management from client to cloud.
Four Themes in One Stock
Juniper has four themes as a value play, 5G rollout play, internet infrastructure play and a re-opening play. The flat forward guidance is priced in and the bar is set rather low so any upside surprise could break shares out of a decade-long price range consolidation. Investors looking for a multi-theme player on the verge of a breakout can monitor shares for opportunistic pullback levels to gain exposure.
JNPR Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for JNPR stock. The weekly rifle chart has a pup breakout with a rising 5-period moving average (MA) support at $25.13 and upper Bollinger Bands (BBs) near the $27.76 Fibonacci (fib) level. The weekly stochastic crossed back up to fuel the breakout higher. The daily rifle chart formed a market structure low (MSL) trigger above $24.13 and a market structure high (MSH) sell trigger below $29.99. The daily rifle chart has a double barrel pup breakout with a rising 5-period MA at $25.59 powered by a stochastic mini pup targeting the upper BBs at the $26.61 fib. Prudent investors can monitor opportunistic pullback levels at the $25.25 fib, $24.35 fib, $23.19 fib, $22.52 fib, and the $21.37 fib. Keep an eye on peer CSCO as they tend to move together as networkers. Upside trajectories range from the $28.44 fib up to the $33.41 fib level.