Summary Investment in cloud technologies is set to grow in the near future. With its newest products, #JuniperNetworks is set to take advantage of this. The stock price is undervalued, given the upward earnings revisions and a modest valuation. The hardware and communication equipment industry is set to grow as companies spend more money to build out their cloud services and internet of things. A company in this space that I think is ideally positioned to take advantage of this is Juniper Networks (NYSE:JNPR). Given its most recent earnings report, there is evidence it is going to see growth in earnings. The stock price has a low valuation given these prospects. I am looking to buy the stock. Communications and Networking Growth The amount spent on communication and networking is set to grow over the next several years. Companies are moving their computing to the cloud. Therefore, service providers are beefing up this side of their business. This includes heavyweights such as #Amazon (NASDAQ:AMZN), #Microsoft (NASDAQ:MSFT), #ATT (NYSE:T) and #Verizon (NYSE:VZ). The beneficiaries of this spending will be companies that cater to the type of networking equipment these companies need. They want to have software defined networks, or SDNs, which gives them the ability to aggregate resources and have more agility in scaling their networks. Juniper Networks Business Juniper reported earnings at the end of October. It earned $0.58 a share, adjusted for one-time gains and costs, on revenue of $1.29B, beating estimates for both numbers. Revenue was up about 2.4%. However, earnings were down 11% from last year. The company reaffirmed guidance on earnings and revenue for the current year. Juniper breaks out revenue into four areas; routing, switching, security and services. The router products are the biggest revenue generator and what the company was founded on. Revenue in that area increased from $604.4 million in the third quarter 2015 to $620.2 million this quarter, driven by an increase in sales of its PTX products. The PTX line is a series of high-performance routers. The demand for these products was driven by cloud providers and Juniper's next-generation IP products. The increase in that revenue was partially offset by lower revenue from other router products. Next is switching. Revenue was up from $201.4 million from a quarter a year ago to $222.5 million this quarter. This includes a 50% rise in sales of its QFX line. These are high-performance switches designed to be used in next-generation IP data centers. They have connectivity up to 100GbE. They are often used when deploying Contrail Orchestration, which I will talk more about below. Security products revenue decreased from $119.6 million in the third quarter of 2015 to $85.5 million in this one. This was because of lower revenue from the company's Branch and High-End SRX products and a decline in revenue from legacy products. Revenue was lower from enterprise, telecom and cloud providers. Juniper says this component of its business is in transition from legacy to new products that were recently introduced, and mentions sales will begin to ramp up here over the next few quarters. There is evidence of that happening. Earlier this week, Juniper announced that its vMX and vSRX virtual firewalls are available on the AWS Marketplace.
http://seekingalpha.com/article/4028259-juniper-networks-poised-growth
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