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Juniper: Going Mobile
07/30/2015 7:00 am EST
In the 1990s, one billion people connected to the Internet with desktop computers and laptops. Between 2001 and 2010, another two billion people connected to the Internet with mobile phones, notes Briton Ryle, editor The Wealth Advisory.
This year, Cisco Systems (CSCO) says 25 billion Internet-enabled things will be connected to the Internet and to each other.
In the next five years, that number will double again to 50 billion and comprise 50 trillion gigabytes of data.
Juniper Networks (JNPR) is often considered a smaller version of Cisco. Juniper sells routing and switching gear to corporations.
In addition to the routers and switches that direct traffic on the Internet, the company also provides software, tech support, and training.
But that comparison to Cisco is not exactly accurate. For one, Juniper has a less-diversified product line. Roughly 50% of sales come from routers and that segment makes up just 17% of Cisco sales.
Anecdotal evidence suggests Juniper is doing better than Cisco in the Internet of Things (IoT) space. Juniper is more aligned with the open-source movement, allowing its switching software to run on any router.
Juniper also has more exposure to the mobile computing space, which may be very important. Indeed, the majority of the growth in Internet traffic is coming from mobile devices, so that's where we want to get invested.
Juniper has $2 billion in cash and long-term debt of $1.95 billion. It is also buying back shares. It bought back nearly $2 billion in shares last year and is expected to retire another $1.4 billion this year. That’s substantial for a $10 billion company
Verizon (VZ) is Juniper’s biggest customer. In January, Verizon announced it was increasing its 2015 CAPEX budget from $17 billion to $18 billion. Overall, carrier spending is expected to be flat in 2015 at $208 billion.
Juniper got an upgrade from Bank of America, who raised it from Neutral to Buy and raised the price target from $27 to $34...
In June, Wedbush raised its rating on Juniper to Outperform with a $32 target. Wedbush said it anticipates “a return to more-than-20% year-over-year earnings-per-share growth and an improved free-cash-flow profile in second-half 2015 to 2016.”
I view Juniper Networks as a solid play on increased CAPEX spending and mobile carrier network upgrades. My buy-under price is $27 and my 12-month price target is $34.
Juniper 's latest were very good. The stock ran above $27 and MKM Partners joined the upgrade fray. I'm raising the buy under price to $28, with a 12-month price target at $34.
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