Reviewing Solid Results From Tech Company

Juniper Networks (JNPR) reported a solid second quarter, with revenues up by 8% and earnings per share (EPS) of $0.43 vs. $0.35, which was $0.04, or more than 10%, above expectations.

The company also guided its third-quarter results to be roughly inline with current estimates. However, the company also expressed concerns about the potential for supply constraints. As a result, JNPR shares are down over 4% on the day.

I will argue that, while the company’s guidance in the current quarter could be vulnerable, the supply constraints will fade at some point. Meanwhile, JNPR’s plans to rejuvenate growth appear to be working, and the stock should work its way higher. Buy JNPR under $28. My $32 target is 16.8X next year’s EPS estimate, a more than 20% discount to the market price-to-equity (P/E) ratio.