Juniper Stock Up 27% in 2024. What’s Happening?

Juniper Networks (NYSE:JNPR), a company that sells networking products, including routers, switches, network management software, network security products, and software-defined networking technology has gained close to 27% in 2024 while its peer  Microsoft’s stock (NASDAQ: MSFT) is up about 14% over the same period. Hewlett Packard Enterprise (HPE) announced in January 2024 that it was acquiring Juniper for $40 per share in cash, valuing the networking company at about $14 billion. HPE and Juniper representatives met with U.S. Department of Justice regulators in mid-November in a bid to prevent an antitrust challenge to HPE’s proposed acquisition. The companies expect to close the deal in early 2025, subject to regulatory approvals. The acquisition will integrate HPE’s existing networking portfolio with Juniper’s cutting-edge AI-driven solutions, delivering a robust and comprehensive networking offering that meets the escalating demand for secure, unified, and cloud-native networking solutions.

Juniper’s Q3 net revenues were $1,331.0 million, a decrease of 5% year-over-year (y-o-y), and an increase of 12% sequentially. GAAP operating margin was 7.1%, an increase from 6.3% in the third quarter of 2023, and an increase from 3.8% in the second quarter of 2024. The company’s GAAP net income was $92.6 million, an increase of 22% y-o-y, resulting in diluted net income per share of $0.28. A notable key spot was the substantial increase in product orders, particularly in the cloud segment, fueled by growing demand for AI-powered networking solutions.

Juniper’s balance sheet remains strong, with total cash and investments rising to $1.6 billion. However, operating cash flows declined year-over-year. The company declared a $0.22 per share dividend but suspended its share repurchase program pending the merger with HPE. We will be closely monitoring the performance of Juniper Networks’ AI-driven enterprise business (which also contributes 45% of total revenues), which leverages artificial intelligence and machine learning to enhance user experiences and streamline administrative tasks related to wireless and wired access. Notably, this division experienced a 13% decline to $1.7 billion in the first nine months of the year.

Separately, several key trends could help Juniper in the long run, including increasing demand for high-speed 400G ethernet network equipment, particularly from cloud and hyperscaler customers. The company is committed to maintaining its momentum and capitalizing on emerging opportunities, including those presented by its planned merger with HPE. Still, we think the stock is fairly priced at current levels (Dec.30). We have revised Juniper’s valuation to $37 per share, based on a $1.67 expected EPS and a 22.2x P/E multiple for the fiscal year 2024. Also, see our analysis of Juniper Revenue for a look at the company’s key revenue streams and how they have been trending.

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[1] Returns as of 1/2/2025
[2] Cumulative total returns since the end of 2016