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Juniper (JNPR) to Report Q4 Earnings: What's in the Cards?

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Juniper Networks, Inc. (JNPR - Free Report) is scheduled to report fourth-quarter 2020 results on Jan 28, after the closing bell. In the September quarter, the company posted a negative earnings surprise of 2.3%. The bottom line missed the Zacks Consensus Estimate by a penny.

The Sunnyvale, CA-based computer network equipment maker is expected to have recorded slightly lower aggregate revenues on a year-over-year basis due to macroeconomic woes. Despite disciplined expense management supported with a healthy backlog, higher logistics and supply-chain related costs due to the prolonged effects of the COVID-19 pandemic are expected to have hurt Juniper’s profitability. Modest sequential decline in Service Provider vertical might have been a major challenge as well.

Factors at Play

During the quarter under review, Juniper announced latest additions to its Connected Security portfolio. It unveiled Adaptive Threat Profiling feature to combat the growing network threats, Juniper Secure Connect to foster dynamic connectivity, and risk-based access control integration with IoT developer — WootCloud — to detect the presence of malicious devices on the radio frequency spectrum. The tripartite enhancements come as a boon, especially at a time when more and more employees are switching to the new normal of working remotely amid COVID-19 pandemic. This is likely to be positively reflected in the upcoming results.

The company is likely to have benefited from accretive collaborations, go-to-market strategy, technological differentiation and cloud vertical strength. Juniper partnered with Telefonica Spain to ensure a secure mobile infrastructure for the latter’s growing 5G network. As part of the agreement, the Spanish telco capitalized on Juniper’s Security Gateway platform. Juniper also teamed up with edge cloud services provider, Zenlayer, to upgrade the latter’s datacenter network while establishing an enhanced global networking infrastructure.

Some of the other companies were ThaiSri and South Korea’s JoongAng Group that tapped Juniper’s avant-garde AI-driven solutions to modernize their overall network system. These significant wins underscore Juniper’s efforts in establishing a streamlined infrastructure supported by best-in-class network performance. Juniper Partner Advantage Program was also one of the major developments that took place in the to-be-reported quarter. Effective Jan 1, the initiative has been specifically designed to create new opportunities for partners through Juniper’s AI-Driven Enterprise strategy.

Further, the company inked an agreement to acquire smart wide area networking startup — 128 Technology, Inc. — for $450 million. Through the contract, the network services provider aims to expand its footprint in the AI-driven enterprise solutions market while providing customers with a unified platform for optimized user experiences from client to cloud. It also secured a deal to acquire California-based software firm — Apstra — for an undisclosed amount. The acquisition is likely to augment Juniper’s capabilities within open programmability by extending Apstra’s closed loop automation and analytics to customers independently of their underlying infrastructure.

However, changing market conditions post the deadly virus outbreak resulting in higher logistics and supply chain-related costs are likely to have led to soft margins.

The Zacks Consensus Estimate for revenues in the Product segment (comprising Routing, Switching and Security), which contributes for the lion’s share of total revenues, is pegged at $775 million. The projection indicates a decline of 2.1% from the year-ago quarter’s reported figure. The consensus mark for revenues from the Service segment is $418 million, which suggests an increase from $416 million reported in the year-ago quarter.

For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,194 million, indicating a 1.2% decline. The consensus mark for adjusted earnings per share stands at 54 cents, which suggests a decline of 6.9% from the prior-year quarter’s recorded figure.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Juniper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Juniper’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 54 cents.

Zacks Rank: Juniper currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Juniper Networks, Inc. Price and EPS Surprise

Juniper Networks, Inc. Price and EPS Surprise

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Weyerhaeuser Company (WY - Free Report) is slated to release fourth-quarter 2020 results on Jan 29. It has an Earnings ESP of +5.64% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Danaher Corporation (DHR - Free Report) is scheduled to release fourth-quarter 2020 results on Jan 28. The company has an Earnings ESP of +5.87% and carries a Zacks Rank #2, at present.

National Instruments Corporation (NATI - Free Report) has an Earnings ESP of +9.92% and a Zacks Rank of 2. The company is set to report fourth-quarter 2020 results on Jan 28.

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