Juniper Networks (NYSE:JNPR), a company that sells networking products, including routers, switches, network management software, network security products, and software-defined networking technology, is set to report its Q1 2023 earnings on April 25. Although investors have been a bit concerned about the broader macro environment, with IT spending coming under pressure, we expect Juniper’s results to hold up well. We expect earnings to come in at about $0.44 per share, roughly in line with estimates and up about 38% versus last year. We estimate that revenues will come in at about $13.5 billion, marking an increase of close to 15% year-over-year.
So what are some of the trends that are likely to drive the company’s earnings for the quarter? Juniper has also been making efforts to increase its enterprise sales. Over Q4 2022, sales to enterprise clients rose by about 30% year-over-year and this trend could hold up in Q1. Moreover, supply chain-related issues and the impact of the semiconductor shortage could be easing for the company. This, coupled with higher sales could help the company’s margins. For Q1, Juniper has projected operating margins of about 13.7%, marking an increase from around 11.8% in the year-ago quarter. Some other trends that could drive earnings include rising demand for high-speed 400G ethernet network equipment, particularly from cloud and hyper-scaler customers. The company also sees an opportunity for the Wi-Fi 6-led wireless refresh.
That being said, there are some concerns as well. Juniper trades at about 14x forward earnings, ahead of rival Cisco, which is the market leader in the space. However, Cisco is expected to post slightly better growth in the near term and also has a better scale in terms of its client base and supply chain. We remain neutral on Juniper stock, with a $31 price estimate, which is roughly in line with the current market price. Check out our analysis of Juniper valuation: Expensive or cheap for more details on what’s driving our price estimate for Juniper. Also, see our analysis of Juniper Revenue for a look at the company’s key revenue streams and how they have been trending.
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