JNPR Stock to Gain More on This Growth Trend
Today’s stock represents one of the most promising strategies for investors: venture capital stocks. These are the stocks of companies that supply their products and services to an entire range of industries, and benefit from the growth in a popular technology trend.
Such companies stand to benefit from their innovative solutions making it to a number of enterprises and participating in the secular growth trend.
Juniper Networks, Inc. (NYSE:JNPR) stock is a case in point. The company is a leading player in developing products and services for the high-performance network requirements of global service providers, cloud providers, and other enterprises. The rising trends of mobile Internet and cloud computing hold the potential to expand the reach and power of the network, together with creating a new wave of subscribers and content. Juniper’s focus on network innovation augurs well for the business, as well as for JNPR stock.
The network infrastructure market is competitive, and is characterized by rapid change.
With the industry undergoing a lot of transformation, Juniper Networks is innovating to capitalize on the tremendous opportunities in the networking market. With workloads and applications shifting to the cloud and network automation, the demand for Juniper products and services should continue to grow.
As per a report by International Data Corporation (IDC), spending on public cloud services and infrastructure is likely to reach $122.5 billion this year, which is an increase of 24.4% over the previous year. (Source: “Worldwide Public Cloud Services Spending Forecast to Reach $122.5 Billion in 2017, According to IDC,” International Data Corporation , February 20, 2017)
For the forecast period of 2015–2020, overall public cloud spending will post a compound annual growth rate (CAGR) of 21.5%. IDC expects that, by 2020, public cloud spending will to go to $203.4 billion worldwide. (Source: Ibid.)
Juniper Networks is in a good position to gain from this trend, as it is focused on growth in the data center and cloud market. The company has expanded its data center switching portfolio, which should drive revenue growth in its switching business in the coming quarters.
Although the net revenue from routing products has been experiencing downside, the revenue from switching products has been going up. This is due to the continuous growth from the data center switching portfolio, driven by higher net revenues from the company’s “QFX Series” products, which increased more than 50% year-over-year.
There are few other risks in the near future like bigger competitors and better products. However, the recent product performance and the planned product refresh cycle for security products is expected to bear fruit over the next few quarters.
Also Read: Best Small Cap Tech Stocks for 2017
On the earnings front, Juniper reported its first-quarter results in April. It announced revenue and profits that were on the higher side of analysts’ expectations. The company posted revenue of $1.2 billion, which is an increase of 11% year-over-year, but a decrease of 12% sequentially.
CEO Rami Rahim stated that this was a positive start to 2017, and that management was pleased with the diversification of the customer base and was confident in its ability to execute its strategy.
Juniper stock has been posting a good run lately, and is up almost 28% over last year. Over the last five years, the stock has gained more than 86%.
Chart courtesy of StockCharts.com
Given the improved outlook for the networking equipment market, JNPR stock has a long-term positive bias. The year 2016 was challenging for the company, but the business and the financials have been improving since then.
As spending by cloud computing giants continues to grow, companies like Juniper Networks should keep on gaining together with Juniper stock.
The Bottom Line on JNPR Stock
In 2016, the Juniper announced a number of new products and enhancements to its products across switching, routing, and security. The company now has a more competitive product portfolio, and is focused on enabling its customers to successfully migrate to cloud architectures.
The network equipment company has set cloud transformation as its primary focus, as it sees major opportunities coming from the shift toward the cloud and network automation. The company’s focus on innovation leaves more room for Juniper stock to grow .
Although there are many challenges ahead, demand remains buoyant. As Juniper stock is hovering near its record highs, investors could consider this venture capital stock on any sign of weakness.