JPMorgan analysts downgraded shares of Juniper Networks (NYSE:JNPR) to Neutral from Overweight, lowering the price target to $29 from $32 per share in a note Tuesday.
The analysts told investors their firm downgraded the stock as cloud and service provider headwinds position the company for downside EPS risk and a pull-back in its valuation multiple.
"We are downgrading shares of Juniper to a Neutral rating from an Overweight rating, as we look for the best positioning within our coverage given the current macro backdrop, with favoritism toward recovering spend in relation to Enterprise customers as well as accelerating spend from Cloud companies toward AI infrastructure," the analysts explained.
"We remain optimistic about Juniper’s growth opportunity in the enterprise, but the lack of leverage to Hyperscale investments in AI infrastructure in the medium-term and at the same time the headwinds in relation to Service Provider capex moderation in the current macro are leading us to view Juniper as the most challenged on a relative basis amongst the three primary Networking companies (Cisco, Arista, and Juniper)," they added.
While the analysts noted that overall drivers concerning elevated backlog are likely similar for Juniper as it is for other networking companies, they expect the magnitude of the headwinds to be much greater for Juniper due to its exposure to service providers as well as cloud exposure to WAN layers.