NEW YORK (TheStreet) -- Juniper Networks (JNPR) is rallying on Monday after activist investor Elliott Management obtained a significant 6.2% stake. Since filing its Schedule 13D, the New York-based investment firm has released a presentation outlining the initiatives it hopes will unlock value.
"Juniper's new CEO along with its existing management team and Board have a unique opportunity to immediately unlock significant value at the Company through three straightforward and much-requested courses of action,"said Elliott portfolio manager Jesse Cohn in a statement. "Investors and Street analysts have been calling for Juniper to implement these value-creation initiatives for years."
Among the initiatives outlined, the firm pushed for dividends, buybacks, optimization of product portfolios and cost cuts. Elliott Management believes these measures can boost stock prices to the range of $35 to $40 a share, nearly double Friday's close of $23.54.
On Friday, the network infrastructure developer jumped after an anonymous options buyer purchased 50,000 April calls for a total cost of $59.3 million.
The Sunnyvale, Calif.-based company is slated to report fourth-quarter results on Jan. 23. Analysts polled by Thomson Reuters anticipate net income of 37 cents a share on $1.22 billion in revenue.
By mid-morning, shares had gained 7.4% to $25.29.
TheStreet Ratings team rates JUNIPER NETWORKS INC as a Hold with a ratings score of C+. The team has this to say about their 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.
- You can view the full analysis from the report here: JNPR Ratings Report