Juniper Makes Strong Push in Router and Switching Markets

Juniper (NYSE:JNPR) reported its earnings last month and based on continued strong performance in routers and switches, we have upgraded our price estimate to $36.95. Juniper seems to be doing well in its core segments and challenging market leader Cisco (NASDAQ:CSCO). Juniper also competes with HP (NYSE:HPQ), Alcatel-Lucent (NYSE:ALU) and Huawei-3Com in the network equipment business.

Our price estimate for Juniper stands at $36.95, implying a discount to market price.

Growth in Routers and Our Forecasts

Juniper’s router revenues grew by about 25% in Q1 2011 compared to Q1 2010. ^[1] The growth is being led by Juniper’s MX series of routers, similar to what we have seen over the past few quarters. In addition to this, Juniper saw some good design wins with T1600 core routers and mentioned that customer interest in its T4000 series of routers remains high. The T4000 will ship later this year. ^[1] We now expect Juniper to gain share at a faster pace, affecting Cisco’s position more severely. You can modify our enterprise router market share forecasts for Juniper in the chart above to see the potential impact on Juniper’s stock value.

Growth in Switching and Our Forecasts

Revenues from network switches grew by 37% in Q1 2011 compared to Q1 2010. ^[1] The growth comes with the success of the EX series of switches. Switching remains a big expansion opportunity for Juniper since the company has very low share in this market. Although the market is currently dominated by Cisco, competitors like Juniper and HP are putting up a fight. We now expect Juniper to gain switching share at a faster pace than implied in our prior forecasts.

See our complete analysis for Juniper’s stock here.

1. Juniper’s Q1 2011 Earnings Transcript, SeekingAlpha [↩] [↩] [↩]