Juniper price target dropped, shares plunge after profit and revenue warning http://ift.tt/2yk0oBW

At least seven analysts lowered their price targets for Juniper Networks Inc. after the high-performance network provider issued a profit and revenue warning late Wednesday, blaming lower-than-expected revenue for the company’s cloud computing vertical.

The company now sees third-quarter revenue of between $1.25 billion to $1.26 billion, compared with previous guidance of between $1.29 billion and $1.35 billion. Juniper cut its per-share adjusted profit expectations to $0.54-$0.56, compared with previous guidance of $0.55-$0.61 a share.

Read: Juniper Networks shares fall after profit, revenue warning

Juniper

JNPR, -4.91%

 shares declined for a third straight session Thursday, falling 6.6% to $25.10 after touching an intraday high of $26.25. Shares are down 11% this week.

In an note to clients early Thursday, BMO Capital Markets analyst Tim Long wrote that even though this miss implies a cloud computing revenue decline in the September quarter, he doesn’t see it as a change in the company’s traction. Rather, Long attributes the decline to “inherent lumpiness” in the business.

Long also noted that he was “impressed” that executives are able to sustain profitability.

At RBC Capital Markets, Mitch Stevens wrote that it wasn’t clear whether the weaker-than-expected results were due to a specific loss of market share or weaker demand. In a note to clients Stevens wrote:

Net Net: we take our numbers and price target lower to reflect lower than expected results. We think the stock will see support in the mid-20s given the company’s ability to protect operating margins in a lower than expected revenue environment.

Don’t miss: Juniper CEO’s diversification strategy is slowly paying off

Even though Juniper lowered its guidance, analyst Simon Leopold at Raymond James believes the stock is a solid long-term bet and wrote this in a note to clients:

Despite the lower 3Q17 outlook, we continue to believe that fundamental demand in the cloud vertical will drive growth that outpaces its legacy service provider and enterprise verticals, and that the longer term opportunity remains intact. Our price target goes to $34 from $35.

MKM Partners analyst Michael Genovese wrote in a note that he believes that the miss is likely because of large contracts with Amazon.com Inc.

AMZN, +0.79%

 and because of competition with Arista Networks Inc.

ANET, -0.76%

In the note he wrote:

We are reducing our 3Q17 estimates to reflect the preannouncement. While revenues and EPS are falling, we are increasing our GMs estimate to 62.9% from 62.0% to make the numbers fit. In our view, this lends credence to the company’s claim that the 3Q17 miss was largely due to the Cloud vertical and the Switching product category, since Switching is Juniper’s lowest GMs product category.

Of the 27 analysts who cover Juniper, four have “overweight” or “buy” ratings and 18 have a “hold” or “sell” rating, according to FactSet. The average price target from analysts for the stock is $29.68, FactSet reported. Shares are down 10.65% so far this year, while the S&P 500 index has gained 14.1%.