Juniper's Stock Sensitive to Router Share, Margins

Juniper (JNPR) competes with Cisco (CSCO), H-P(HPQ) and Alcatel-Lucent (ALU) in the router market. We currently have a Trefis price estimate of $23.35 for Juniper's stock, about 17% below the current market price of $28.18.

Trefis members have created forecasts for two key drivers of Juniper's stock over the last week: (1) Juniper Market Share in Edge Routers and (2) Routers Gross Profit Margin. The member forecasts suggest that Juniper's market share in edge routers will trend higher than the Trefis forecast, while the routers' gross profit margin will trend lower. These projections suggest a combined upside of about 1% for Juniper's stock.

Juniper's router business accounts for 38% of the $23 Trefis price estimate for Juniper's stock and the sale of edge routers is an important component of the revenues generated by that business. Hence, Juniper's stock is quite sensitive to (1) Juniper's market share in edge routers and (2) routers' gross profit margin . Below are charts showing recent estimates created by Trefis members for the two drivers, in detail.

1. Juniper Market Share in Edge Routers

The average of forecasts for Juniper Market Share in Edge Routers created by Trefis members indicated a projected increase from 14.6% in 2010 to 17.1% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 14% in 2010 to 16% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Juniper's stock. In the past, Juniper Market Share in Edge Routers has decreased from 20% in 2003 to 13.5% in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Juniper's stock to Juniper Market Share in Edge Routers.

Our complete analysis for Juniper Market Share in Edge Routers is here.

2. Routers Gross Profit Margin

The average of forecasts for Routers Gross Profit Margin created by Trefis members indicated a projected decrease from 67.4% in 2010 to 66.9% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 68.7% in 2010 to 70.2% by the end of the Trefis forecast period. The member estimates imply a downside of 2% to the Trefis price estimate for Juniper's stock. In the past, Routers Gross Profit Margin has decreased from 71% in 2003 to 67.2% in 2009.

You can drag the forecast trend line above to express your own view, and see the sensitivity of Juniper's stock to Routers Gross Profit Margin.

Our complete analysis for Juniper's stock is here.

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