Juniper Could Benefit from Higher Margins & Edge Router Share
Juniper (NYSE:JNPR) competes with Cisco (NASDAQ:CSCO) and Alcatel-Lucent (NYSE:ALU) in the networking equipment market. We currently have a Trefis price estimate of around $25 for Juniper’s stock, about 10% below the current market price of $28.
Trefis members have created forecasts for two key drivers of Juniper’s stock over the last week: (1) Juniper Market Share in Edge Routers and (2) Routers Gross Profit Margin. The members’ forecasts suggest that Juniper Market Share in Edge Routers and Routers Gross Profit Margin will trend above the Trefis estimate. These projections indicate a combined upside of around 12% for Juniper’s stock.
We estimate that Routers account for around 35% of the $25 Trefis price estimate for Juniper’s stock. Hence the stock is quite sensitive to (1) Juniper Market Share in Edge Routers and (2) Routers Gross Profit Margin. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
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1. Juniper Market Share in Edge Routers
The average of forecasts for Juniper Market Share in Edge Routers created by Trefis members indicated a projected increase from around 16% in 2010 to 22.5% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 14% in 2010 to 16% by the end of the Trefis forecast period. The member estimates imply an upside of 8% to the Trefis price estimate for Juniper’s stock. In the past, Juniper Market Share in Edge Routers has decreased from 20% in 2003 to 13.5% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Juniper’s stock to Juniper Market Share in Edge Routers.
Our complete analysis for Juniper Market Share in Edge Routers is here.
2. Routers Gross Profit Margin
The average of forecasts for Routers Gross Profit Margin created by Trefis members indicated a projected increase from 74% in 2010 to around 79% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 69% in 2010 to around 71% by the end of the Trefis forecast period. The member estimates imply an upside of 4% to the Trefis price estimate for Juniper’s stock. In the past, Routers Gross Profit Margin has decreased from 71% in 2003 to around 67% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Juniper’s stock to Routers Gross Profit Margin.