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Juniper (JNPR) Up 0.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Juniper Networks (JNPR - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Juniper due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Juniper Q4 Earnings Miss Estimates, Top Line Falls Y/Y

Juniper reported soft fourth-quarter 2023 results, with both the bottom and top lines missing the respective Zacks Consensus Estimate. The company recorded lower revenues year over year, owing to sluggish demand for Cloud Ready Data Center and Automated WAN Solutions. However, increasing SaaS subscriptions and healthy demand for hardware maintenance and professional services partially cushioned the top line. The company’s Annual Recurring Revenue grew 30% year over year to $384 million.

Net Income

Net income, on a GAAP basis, was $124.3 million or 38 cents per share, down from $180.4 million or 55 cents per share in the prior-year quarter. A combination of higher operating expenses and lower net sales year over year affected the net income.

Non-GAAP net income stood at $196.9 million or 61 cents per share compared with $213.8 million or 65 cents per share in the year-ago quarter. The bottom line fell short of the Zacks Consensus Estimate by 3 cents.

In 2023, GAAP net income was $310.2 million or 95 cents per share, down from $471 million or $1.43 per share in 2022. Non-GAAP net income was $736.4 million or $2.26 per share compared with $642.6 million or $1.95 per share.

Revenues

Juniper registered revenues of $1.36 billion, down from $1.44 billion in the year-ago quarter, primarily due to weakness in Cloud and Service Provider verticals. However, growth in the Enterprise vertical supported the top line during the quarter. The top line fell short of the Zacks Consensus Estimate of $1.4 billion.

In 2023, the company generated $5.56 billion in revenues, up from $5.3 billion reported in 2022.

Product revenues totaled $858.6 million compared with $988.3 million in the year-earlier quarter and fell short of our revenue estimate of $988.4 million. Net sales from Service were $506.2 million, up from $460.5 million in the year-ago quarter. The 10% year-over-year growth was driven by strong sales of hardware maintenance contracts and SaaS subscriptions. Net sales from Service surpassed our revenue estimate of $411.9 million.

By vertical, revenues from the Cloud business declined to $317.3 million from $380.3 million in the prior-year quarter but beat our estimate of $262.6 million. Declining demand trends for Cloud Ready Data Centers and AI-Driven Enterprise solutions affected the revenues of this vertical.

Service Provider contributed $400.2 million in revenues, down 15% year over year. However, net sales surpassed our estimate of $379.1 million. The downturn was primarily induced by weak demand for Automated WAN solutions.

Revenues from Enterprise recorded 8% growth year over year to $647.3 million. The upside was backed by healthy demand for AI-Driven Enterprise, hardware maintenance and professional services. Net sales missed our revenue estimate of $758.6 million. However, declining trends in Cloud Ready Data Center partially offset this positive trend.

By customer solution, Automated WAN solutions’ revenues aggregated $454.1 million, down 5% year over year. Net sales from AI-Driven Enterprise were $321.2 million, up 1% year over year. Cloud-Ready data centers contributed $180.8 million in revenues, down 30% year over year. Hardware Maintenance and Professional services generated $408.7 million in net sales, up from $391.6 million in the year-ago quarter.

By region, revenues from the Americas declined to $849.7 million from $857.4 million a year ago. Net sales from EMEA (Europe, Middle East and Africa) fell to $335.8 million from $378.5 million in the prior-year quarter. The downside in the EMEA region was induced by weak demand in the Service Provider and Cloud business. In the Asia-Pacific, revenues decreased 15.8% year over year to $179.3 million, owing to weakness in all verticals.

Other Details

Non-GAAP gross margin improved to 60.8% compared with 58.5% in the year-ago quarter. Favorable software revenue mix, easing of supply chain and other related costs boosted the gross margin.

Operating expenses, on a non-GAAP basis, rose to $579.8 million from $571.3 million, owing to higher headcount-related costs. Non-GAAP operating margin was 18.3%, marginally down from the year-ago quarter’s tally of 19.1%.

Cash Flow & Liquidity

In the fourth quarter of 2023, Juniper generated $9.1 million of cash from operating activities compared with $119.6 million in the year-earlier quarter. Delayed payment from federal taxes led to lower cash flow from operations. In 2023, the company registered an operating cash flow of $872.8 million, up from $97.6 million in 2022. As of Dec 31, 2023, the company had $1.3 billion in cash and cash equivalents and investments, with $1.61 billion of long-term debt compared to respective tallies of $1.23 billion and $1.6 billion in the prior-year period.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -11.49% due to these changes.

VGM Scores

At this time, Juniper has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Juniper has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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