VALUATION HIGHLIGHTS

1. Network Services constitute 48% of the Trefis price estimate for Juniper's stock.
2. Routers constitute 26% 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. HP Strikes deal to buy Juniper Networks

Hewlett Packard Enterprise will acquire Juniper in a $14 billion all-cash deal, as it looks to strengthen its artificial intelligence offerings. The transaction is expected to close by late 2024 or early 2025, subject to regulatory approvals.

2. Q4 2023 Earnings

Juniper Networks posted a weaker-than-expected set of Q4 2023 results. While revenue declined 3.4% year-over-year to $1.4 billion, adjusted earnings stood at $0.61 per share.

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

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 depend 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.