FBR upgrades network infrastructure company Juniper (JNPR) to OUTPERFORM and raises their target to $29. Yesterday, JNPR posted solid Q2 results and raised its guidance for the year, spurring FBR’s change of heart:
While our upgrade rests in no small part on continued solid demand trends and mgmt’s strong execution in the face of macro headwinds, we also are giving more weight to the product cycle story around Juniper’s entrance into the enterprise switching market. Although this market is not expected to grow as fast as the service provider market, Juniper’s solid progress with its EX switching platform, which contributed $10M in 2Q sales, suggests this opportunity could bear fruit sooner than we expected. Over time, we see the potential for faster market growth as well, with Ethernet becoming a bigger focus for data centres and as companies embrace “Business 2.0” collaborative applications needing more network capacity and intelligence.
We expect the shares to rise today, but even at a prospective $24 price, the stock would still be valued around a trough P/E/G multiple of 0.7x on our $1.45 EPS estimate for 2009. We believe this valuation is compelling and represents an attractive entry point to build or add positions.
FBR upgrades Juniper Networks (JNPR) from Neutral to OUTPERFORM, target raised from $27 to $29.