Why Juniper (JNPR) Stock Is Tumbling Today

Juniper (JNPR) stock is diving in early afternoon trading on Monday, after Cisco (CSCO) and Ericsson (ERIC) agreed to a partnership.
By Rachel Graf ,

NEW YORK (TheStreet) -- Juniper Networks (JNPR) - Get Report stock is lower by 9.02% to $28.85 in early afternoon trading on Monday, after Ericsson (ERIC) partnered with Cisco (CSCO) instead of with Juniper, as some investors had hoped. 

Ericsson and Cisco have agreed to work together on certain network items, and expect the partnership to create upwards of $1 billion for each company through 2018. 

However, partnerships within the network industry often struggle, and Ericsson might have generated greater value by acquiring Juniper instead, Sebastien Sztabowicz, an analyst at Kepler Cheuvreux, said in a note, according to Bloomberg. 

Juniper would have been an ideal acquisition target for Ericsson, given its "strong routing and growing Ethernet switch business; however, today's announcement makes such a transaction less likely, in our view," Drexel Hamilton's Brian White said on a conference call, Barron's reports. 

Based in Sunnyvale, CA, Juniper designs, develops, and sells products and services for high-performance networks to enable customers to build networks for their businesses.

Separately, TheStreet Ratings team rates JUNIPER NETWORKS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate JUNIPER NETWORKS INC (JNPR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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

  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 121.73% and other important driving factors, this stock has surged by 46.52% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JNPR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 90.8% when compared to the same quarter one year prior, rising from $103.60 million to $197.70 million.
  • Net operating cash flow has significantly increased by 473.24% to $293.00 million when compared to the same quarter last year. In addition, JUNIPER NETWORKS INC has also vastly surpassed the industry average cash flow growth rate of 9.34%.
  • 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 swung to a loss, reporting -$0.90 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus -$0.90).
  • You can view the full analysis from the report here: JNPR

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...