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The thrill of Juniper Networks ( JNPR ) management’s optimism, despite their Q2 guidance miss, seemed to wear thin on investors who started Friday with a 2.6% pop but watched their stock deflate all day along with the overall stock market. After Thursday’s close, Juniper, the biggest computer networking rival of No. 1 Cisco Systems ( CSCO ), disclosed refined first-quarter earnings and revenue growth that missed initial guidance. It surprised no one, since Juniper pre-annnounced similar numbers on April 11 while warning of delays from its big telecom service customers and some weakness in enterprise market demand for Juniper products, notably the EX Series ethernet switches and SRX Series next-generation data-center firewall. Indeed, Q1 enterprise sales fell 19% from Q1 2015, and telecom delays led service provider revenue to fall 16%, the company said. Juniper also guided Q2 below analyst Wall Street models. Nonetheless, CEO Rami Rahim was optimistic about the full year in his conference call with analysts after the earnings release, and investors seemed to key off that optimism early in the stock market today . But near the session’s close, Juniper stock was flat, near 23, 27% off a five-year high 32.39 set Nov. 4. Cisco stock was down 1.5% late Friday. “We are encouraged by improved visibility with respect to the timing of these (delayed telecom) deployments as well as some early and important design wins with our new products,” Rahim told the analysts. “We remain constructive on the full year 2016 and intend to continue to make progress toward our long-term financial model.” Having closed on its acquisition of BTI Systems on April 1, which should add about $12.5 million in initial quarterly sales, Juniper guided current Q2 revenue down 2.6% to $1.19 billion, plus or minus $30 million, yielding non-GAAP earnings per share of 44 cents to 50 cents, which at the 47-cent midpoint is down 11% from Q2 2015’s 53 cents. Analysts polled by Thomson Reuters had modeled $1.2 billion and 49 cents. For Q1, Juniper reported revenue up 3% to $1.1 billion and non-GAAP EPS up 16% to 37 cents. But initially Juniper had guided Q1 to $1.17 billion and 44 cents. Nomura analyst Jeffrey Kvaal lowered his price target on Juniper stock to 24 from 26, reiterating a neutral rating. “We found talk of new telco architectures and the need to diversify from telcos concerning,” Kvaal wrote in a Friday research note. “We have argued NFV (network function virtualization) is real, here and hurting routing — here is more evidence. We view telco as (about) 40% of sales. We found comments on linearity, product migrations and switch/router integration perplexing, even conflicting.” But William Blair analyst Jason Ader reiterated an outperform rating on Juniper stock, “based on our 2016 non-GAAP EPS estimate of $2.05,” or four cents more than consensus, he wrote in a Friday research note. “We continue to like the risk/reward equation for the stock in view of the operational improvements, capital allocation focus and likelihood of a second-half rebound in switching and routing,” Ader wrote. Scalper1 News
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