Juniper’s (JNPR) Q1 Weak Outlook Loses Charm on Stock
By:NewsyStocks   Thursday, January 26, 2022 7:10 PM

Networking & communication device maker Juniper Networks Inc. (JNPR) offered bleak outlook for the first quarter on weak demand. This is way below consensus thereby dragging the stock down more than 7 percent in the extended hours of trading. The company's fourth quarter earnings came in line with estimations, but revenues were missed.

The worst part of the outlook is that it is predicting a further sharp fall in adjusted operating margin for the first quarter.

Q4 Results

The Sunnyvale, California-based Juniper Networks reported 49.5 percent drop in net income to $96.16 million from $190.23 million and earnings per share slipped 48.6 percent to 18 cents from 35 cents in the year-ago quarter. On an adjusted basis, net income for the latest quarter was $150.1 million or 28 cents a share representing 33 percent fall from fourth quarter of 2010.

Total net revenues skid 5.9 percent to $1.12 billion from $1.19 billion dragged down by product revenues by 12 percent to $847.5 million from $962.2 million in the previous year quarter.

Wall Street analysts have predicted the company to earn 28 cents a share on revenues of $1.13 billion for the fourth quarter.

Operating margin slipped to 11.9 percent from 19.1 percent in the year-ago quarter and from 12.4 percent in the third quarter. Similarly, adjusted operating margin dropped to 18.6 percent from 24.5 percent in the previous year quarter and from 20.0 percent in the third quarter.


Going forward, Juniper Networks sees adjusted earnings of 11 – 14 cents a share on revenues of $960 - $990 million for the first quarter. The company is also projecting adjusted operating margin between 11 percent and 13 percent for the same period. Street analysts have consensus earnings estimate of 26 cents a share on revenues of $1.1 billion.

The company blamed global uncertainty for the bleak forecast in the near term though their long-term demand trajectory remains in tact. But reports indicate that Juniper is losing its market share battered by tough competition.

Our Take

The company needs to work vigorously to put back the operating margin on trail, which is witnessing a steel fall during the last two quarters. Juniper also needs to improve its market share. The outlook does not offer any scope for the stock to appreciate in the near term. One needs to wait for any fresh catalyst to emerge to enter into the counter.