Juniper Networks (JNPR) An Attractive GARP Play - Drexel Hamilton

Drexel Hamilton analyst, Brian White, believes expectations for Juniper Networks (NYSE: JNPR) are too low considering new revenue opportunities offered by the cloud, the expansion of the software and services business and modest financial targets. He sees the stock as "an attractive GARP play, down 18% YTD and trading at just over 8x EPS". No change to Buy rating or $36 PT.

Key points include:

Juniper generated 19% of 2015 sales from cloud providers and expects this to reach 24% in 2019 for a 10-13% CAGR, well above the 2-4% growth expected in telecom, 2-3% in enterprise and 3-5% in cable.

Juniper expects software and services to expand from 30% (3% software, 27% services) of 2015 sales to 45% in 2019. More software and services should drive higher levels of recurring revenue and improved predictability.

Juniper's new CFO (Ken Miller) provided updated financial objectives (2016-2019), including revenue targeted at a 3-6% CAGR, gross margin at 64%, operating margin at 25% and an EPS CAGR of 5-8%. Also, Juniper committed to returning 50% of free cash flow to investors.

For an analyst ratings summary and ratings history on Juniper Networks click here. For more ratings news on Juniper Networks click here.

Shares of Juniper Networks closed at $22.60 yesterday.

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