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Will Juniper be Able to Sustain Momentum Amid Headwinds?

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Juniper Networks, Inc. (JNPR - Free Report) has impressed investors with its recent earnings streak, having surpassed estimates in each of the four trailing quarters. Further, the company’s leading position as a provider of networking solutions and communication devices bodes well for future growth.

We believe that the company’s notable traction across markets will drive growth in the upcoming quarters.

Factors to Consider

Juniper plans on introducing the industry’s first 400-gig product and is well positioned to gain incremental market share as cloud, service provider and enterprise customers look to meet surging bandwidth requirements. The company is set to capitalize on the growing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. The company is offering its new suite of products, including the T4000 core router, QFX data center platform, and ACX and PTX packet/optical solutions, among others.

Also, with the growing usage of smartphones and tablets, mobile data traffic has gone up. This has resulted in increased demand for advanced networking architecture, in turn, leading service providers to spend more on routers and switches. Juniper is expected to benefit from the higher spending pattern among carriers to upgrade their networks to support the incremental growth in data traffic. We believe Juniper’s new products to meet the escalating needs and thereby finding easy acceptance among customers.

Notably, in the past three months, the company’s shares have lost 14% compared with the industry’s average decline of 17.9%.

However, uncertain global macro environment and anticipation of potentially weak investment patterns among customers are major headwinds for Juniper. For instance, in the third quarter, the company’s net revenues from Cloud business declined 27.5% year over year to $250 million as several of its customers are running their networks harder, and the pace of cloud deployments are proceeding more slowly than it was previously anticipated.

Zacks Rank & Stocks to Consider

The stock currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are QUALCOMM Incorporated (QCOM - Free Report) , Ubiquiti Networks, Inc. and Harris Corporation . While QUALCOMM and Ubiquiti Networks sport a Zacks Rank #1 (Strong Buy), Harris carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

QUALCOMM surpassed estimates in each of the trailing four quarters, average positive earnings surprise being 18.47%.

Ubiquiti Networks surpassed estimates thrice in the trailing four quarters, average positive earnings surprise being 11.30%.

Harris outpaced estimates in each of the preceding four quarters, average earnings surprise being 7.06%.

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