'Two ways to win:' Evercore ISI upgrades Juniper stock

Investing.com -- Evercore ISI lifted Juniper Networks (NYSE:JNPR) stock to Outperform from In-Line on Tuesday while maintaining a $40 price target.

Juniper shares rose nearly 2% after the market open.

The investment bank outlines "two ways to win" for Juniper, pointing to outcomes that could lead to gains in the current share price.

The first scenario involves Hewlett Packard Enterprise (NYSE:HPE) succeeding in its bid to acquire Juniper, which would result in Juniper shareholders receiving $40 per share, a 15% upside.

The second scenario, where HPE loses the Department of Justice (DOJ) trial and Juniper remains independent, also appears favorable. Evercore ISI believes that Juniper could benefit from a networking recovery, share gains from MIST, cloud ramps including xAI, and margin expansion, potentially leading to an earnings per share (EPS) of $2.50 in the calendar year 2025.

The DOJ lawsuit, filed on January 29, aims to block HPE's pending acquisition of Juniper, arguing that the merger would minimize competition against Cisco Systems (NASDAQ:CSCO).

Despite HPE receiving clearance from several jurisdictions, the DOJ's concerns center on the impact of the merger on the enterprise wireless local area network (WLAN) market.

Pre-trial hearings are expected in the coming months, with an absolute walk-away date set for October 9, 2025. If the deal falls through, HPE would be responsible for an $815 million termination fee, Evercore highlights.

The firm’s analysts outline an upside case for Juniper as a standalone company, driven by leverage to two significant networking trends in 2025: Cloud AI buildouts and campus networking recovery.

Juniper's cloud business has seen a 30% year-over-year increase in revenue in the most recent quarter, with total product orders up 60% year-over-year. The campus networking segment is expected to grow by 15% or more, outpacing the broader market's projected 10% growth.

“The final piece of the equation is the Service Provider market, which we expect to see a modest secular recovery in CY25, with 5% y/y growth after a 16% decline in CY24,” analysts noted.

“All together, we think Juniper can deliver 13%+ revenue growth in CY25 and earnings in the range of $2.50,” they added.

Juniper's recent performance has shown strength in cloud and enterprise sectors, with product orders growing 60% year-over-year, driven by robust growth from cloud customers.
Cloud revenue grew 30% in the September quarter, marking a recovery after six consecutive quarters of declines.

The company's CEO confirmed on the social media platform X their involvement in the xAI datacenter build-out.

This article first appeared in Investing.com