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Why Juniper is a Better Buy Than Cisco

August 16, 2014 | About:
sandyinvestment

sandyinvestment

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Juniper Networks (JNPR) and Cisco Systems (CSCO) are occupied with a turf war in the network equipment space. As far as stock business sector returns are concerned, Cisco is heading Juniper by conveying gains of 16% this year. Juniper itself hasn't done excessively shabbily either, having picked up almost 7% in 2014. At the same time, over the long haul, there is a solid risk that Juniper may overwhelm Cisco. We should see why.

Strong prospects

Juniper is focusing on broadening its portfolio by releasing new products and discarding the underperforming ones. Thus, I can say that Juniper has set its principles to assemble a solid establishment for what's to come. Casting aside the setback because of a sporadic show in the previous quarter, Juniper is making a rebound.

The organization is relying on item launches, cost diminishment initiatives, enhanced execution and innovations to drive development. Juniper expects development in the segments of SDN (software characterized network) and NFV (network capacity virtualization). Strong interest for smartphones and tablets all through the world has prompted a climb in information usage and consumption. Thus, Juniper is poised to upgrade its sales as information movement grows. SDN system sales will also shoot up to $15.6 billion by 2018, opening up an alternate business sector for Juniper.

New products

The landing of Mx104 should also add to Juniper's prospects. Juniper has won various design wins in stores from top customers and service providers. It has evacuated the Mobilenext suite of products from its portfolio because of its diminishing share in the business. To hold the quality and diversification of its portfolio, it is dispatching various switching products, including the Qfx5100 switch, trusting that it will bring success to the organization.

Juniper continues to work its path into the server farms through its switch families. By 2017, Juniper expects an upswing in the interest and sales of routers and switches by give or take 9%. The idea of One Juniper will help it in cloud environment building. This restructuring involves 6% personnel and R&d cost decrease.

Key partnerships will drive development

The organization has been selected by AT&T (T) to supply their Domain 2.0 vision for a user-characterized and effective cloud solution. Also, there has been a constantly rising interest for Web 2.0, link and carriers from top enterprise areas.

Juniper's goal is to procure long haul gains by spending just on item advancement schemes. The selection of software characterized networks by Juniper is ending up being gainful.

Also, last month, Cantor Fitzgerald analyst Brian J. White repeated a Buy rating on Juniper Networks with a value focus of $32. He said:

"In the wake of starting the year on a strong note, Juniper's stock topped the day following (1/24/14) the organization reported its plan to reveal details around its IOP. Truth be told, the stock is presently exchanging beneath the closing value the day that Elliot Management documented a Schedule 13d. In spite of the fact that Juniper's stock appears to have succumbed to a "sell on the news" design; we accept Juniper's IOP plan has longer-term implications and provides the organization with wiggle room around EPS through the following 12-year and a half. Also, Juniper's first profit ($0.10 per quarter) commences in 3q:14."

"We have also recognized a developing concern lately around the effect of service supplier consolidation trends on capital spending this year, especially in North America. Despite the fact that we recognize there is the potential for a modest headwind from consolidation activities, and there are some information points to support this worry; we have recognized more information points that support constructive worldwide spending trends and thus we don't anticipate that this consolidation will be an "arrangement executioner" for Juniper. We would also bring up that Juniper is focused on conveying "High-IQ Networks" and best-in-class "Cloud Builders," areas where we accept customers will focus their spending"

Also, Juniper is also anticipated that will profit from the increasing 4g LTE sending in the U.s.a. At&t and Sprint are sending their LTE networks at a fast rate and the worldwide LTE service income is required to develop from $78 billion in 2013 to over $500 billion in 2018, symbolizing a CAGR of 46%.

As of now, just around 30% share of the U.s.a. cell market and as the arrangement increases, the capital investments will also increase and consequently Juniper will get higher request.

Why Juniper is superior to Cisco

Throughout the last few quarters, Juniper's switch business has developed at a faster pace than Cisco's. Indeed, Juniper has been picking up piece of the overall industry at the cost of Cisco and the switch business now accounts for almost half of Juniper's income. That is not all, Cisco's revenues been declining across various segments, which is the reason I think Juniper is a finer buy for the present.

As I have officially stated, I think Cisco has lost its route under CEO John Chambers. Cisco's stock cost has generally underperformed the industry throughout the last decade and I don't think it will change as long as John Chambers is the organization's CEO. The rich profit, which now has a yield of 3.1%, has supported Cisco's share or else it would've dove further.

Chambers has been Cisco's CEO for almost two decades now. Notwithstanding, I think the organization needs another leadership to push future development, which I don't think is going to happen whenever soon.

Web of Things is surely Cisco's best wagered to sustain development. The organization as of late obtained Tai-f Systems to boost its Internet of Things efforts, however Cisco's ROI on its acquisitions have been really poor. Cisco has neglected to develop on prominent acquisitions of Starent ($2.9b), Scientific Atlanta ($6.9b), and Webex ($3.2b) and so on and obviously, Chambers is responsible for that.

I ponder time Cisco freshens up its top managerial staff, thus, I think investors are better off wagering their cash on Juniper.

Conclusion

Subsequently, there's a strong possibility that Juniper may surpass Cisco. Its focus on item development and partnerships with key players will prompt strong performances over the long haul, making it a solid wager.


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