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Why Juniper (JNPR) Is Rising Today

NEW YORK (TheStreet) -- Juniper Networks (JNPR) rose 0.6% to $25.48 Tuesday following an upgrade from analyst firm Oppenheimer.

Oppenheimer analyst Rick Schafer upgraded the networking equipment producer to "outperform" from "perform," with a new price target of $32. Activist investor Elliot Management, which recently took a 6.2% stake in Juniper, is a large part of the upgrade. "We've long thought Juniper could be an activist candidate," Schafer wrote.

The analyst agreed with Elliot's "three value creation initiatives," which include OpEx cuts, an enhanced capital allocation plan, and a review of business units.

TheStreet Ratings team rates JUNIPER NETWORKS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about its recommendation:

"We rate JUNIPER NETWORKS INC (JNPR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 489.4% when compared to the same quarter one year prior, rising from $16.81 million to $99.10 million.
  • JNPR's revenue growth trails the industry average of 22.2%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • JUNIPER NETWORKS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JUNIPER NETWORKS INC reported lower earnings of $0.36 versus $0.79 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus $0.36).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Communications Equipment industry and the overall market, JUNIPER NETWORKS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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