Juniper Sidelined For A While On Sluggishness In Cloud Segment But Eventually Should Work Higher: Analyst

Needham analyst Alex Henderson reiterated the Buy rating on Juniper Networks, Inc. JNPR, lowering the price target to $33 from $41.

Juniper Networks reported Q2 2023 revenue growth of 13% Y/Y to $1.43 billion, beating the consensus of $1.42 billion.

The analyst notes that Enterprise is approaching 50% of Revenue and has robust "Mistified" growth.

Henderson thinks that duress in Service Provider (SP), which is down 1% with weak Orders and project push-outs, is concerning, and the weak Cloud, down 6% Y/Y, raises concerns about the company's spending priorities. 

Henderson cautions that SP and Cloud are likely to remain a headwind in 2H but expects Enterprise to remain robust, driven by share gains. 

JNPR is likely to be sidelined for a while but eventually should work higher. 

Based on the above, the analyst sharply cut the FY24 forecast to just 1.5% growth from 6.1% prior forecast.

However, the current backlog can drive Revenue growth upside over the next 2-3 years and could deliver 10% plus growth with 10%-20% Product growth, the analyst adds. 

The analyst adds that strengthening cash flow, improving product line, and expanding into the Cloud and Enterprise markets over time should gradually help this name.

Price Action: JNPR shares are trading lower by 6.1% to $27.86 on the last check Friday.