VALUATION HIGHLIGHTS

1. Network Services constitute 43% of the Trefis price estimate for Juniper's stock.
2. Routers constitute 28% of the Trefis price estimate for Juniper's stock.
3. Network Switches constitute 20% of the Trefis price estimate for Juniper's stock.

WHAT HAS CHANGED?

1. Latest Earnings - Q3'20

Juniper delivered a steady performance for its third quarter, with the company beating consensus estimates for earnings and revenues. The company's total revenue remained flat at $1,138 million, as the gains in Enterprise and Service business were wiped out by the weakness in the Cloud business. The company reported non-GAAP earnings per share of $0.43, above the mid-point of its guidance due to lower operating expenses as the company continued to benefit from travel costs. Moreover, Juniper provided an upbeat outlook for Q4 2020, with the company expecting revenue in the range of $1.140 billion to $1.240 billion while the gross margin is expected to hover around 59%. Additionally, the company expects non-GAAP EPS to be in the range of $0.48 to $0.58.

BUSINESS SUMMARY

Juniper Networks creates networking equipment such as switches and routers used primarily by businesses and Internet Service Providers to route IP data such as emails, videos, files and other digital communication. For example, an email that you send to a distant friend travels through various switches and routers made by companies like Juniper, Cisco, Alcatel-Lucent and Huawei along the path to its destination.

SOURCES OF VALUE

Routers

Edge Routers, along with Core Routers and Enterprise Routers, are used by Internet Service Providers to route data traffic from network to network.

Network Switches

The market for switches is almost 50% bigger than the corresponding router market. However, due to Cisco's entrenched position in the switching market, we do not believe Juniper will attain a majority share in this space. Of the various kind of switches, bottom layer switches are the most prevalent types of switches found within networks and account for more than 90% of our market size estimates.

Network Services

In addition to networking hardware, Juniper provides maintenance and support services to its customers to help them fix problems that occur with networking equipment. Juniper's network service revenues and profits are dependent on the installed base of Juniper switch and router equipment in use.

Network Security

Juniper also provides its customers with security solutions that help protect networks from outside attacks. Network security equipment includes products such as Virtual Private Networks (VPNs) and firewalls. Juniper faces competition from the likes of Cisco, CheckPoint and IBM. With software-defined networking gaining steam, security has become a major concern for customers given the involvement of white label hardware.