Up simply 30% since March, we imagine Juniper Networks inventory (NYSE: JNPR) has room for greater
Up simply 30% since March, we imagine Juniper Networks inventory (NYSE: JNPR) has room for greater than 15% upside to ranges above its pre-Covid excessive. The corporate develops and markets networking merchandise, comparable to routers, switches, community administration software program, and safety merchandise. The corporate’s inventory trades at $22 at present and is, in reality, down 10% to this point this 12 months. It traded at $24 in February 2020 – simply earlier than the outbreak of coronavirus – and is at present 7% beneath that degree, as properly. Additional, with the elevated on-line exercise for the reason that pandemic, demand for the corporate’s merchandise will stay excessive within the close to to medium time period, and the inventory has the potential to rise round 15% to a brand new excessive previous its pre-Covid ranges. Our conclusion is predicated on our comparative evaluation of JNPR inventory efficiency throughout the present disaster with that throughout the 2008 recession in our interactive dashboard.
2020 Coronavirus Disaster
Timeline of 2020 Disaster So Far:
- 12/12/2019: Coronavirus instances first reported in China
- 1/31/2020: WHO declares a worldwide well being emergency.
- 2/19/2020: Indicators of efficient containment in China and hopes of financial easing by main central banks helps S&P 500 attain a report excessive
- 3/23/2020: S&P 500 drops 34% from the height degree seen on Feb 19, as COVID-19 instances speed up exterior China. Doesn’t assist that oil costs crash in mid-March amid Saudi-led worth warfare
- Since 3/24/2020: S&P 500 recovers 65% from the lows seen on Mar 23, because the Fed’s multi-billion greenback stimulus package deal suppresses near-term survival anxiousness and infuses liquidity into the system.
In distinction, right here is how JNPR inventory and the broader market fared throughout the 2007-08 disaster.
Timeline of 2007-08 Disaster
- 10/1/2007: Approximate pre-crisis peak in S&P 500 index
- 9/1/2008 – 10/1/2008: Accelerated market decline similar to Lehman chapter submitting (9/15/08)
- 3/1/2009: Approximate bottoming out of S&P 500 index
- 12/31/2009: Preliminary restoration to ranges earlier than accelerated decline (round 9/1/2008)
JNPR and S&P 500 Efficiency Over 2007-08 Monetary Disaster
We see JNPR inventory declined from ranges of round $25 in September 2008 (pre-crisis peak) to ranges of round $14 in March 2009 (because the markets bottomed out), implying JNPR inventory misplaced over 40% from its approximate pre-crisis peak. It recovered submit the 2008 disaster, to ranges of just below $27 in early 2010, rising by virtually 90% between March 2009 and January 2010. The S&P 500 Index noticed a decline of 51%, falling from ranges of 1,540 in September 2007 to 757 in March 2009. It then rallied to ranges of 1,124, rising by about 48% between March 2009 and January 2010.
JNPR Fundamentals Over Latest Years
JNPR revenues decreased from $5 billion in 2016 to $4.5 billion in 2019, primarily as a result of decrease income from the merchandise phase. Together with decrease income, earnings additionally decreased from $1.55 to $1.01 throughout this era.
Does JNPR Have Sufficient Money Cushion To Meet Its Obligations By means of The Coronavirus Disaster?
JNPR’s complete debt dropped marginally from $2.1 billion in 2016 to $1.7 billion in 2019, whereas its complete money decreased from round $2.6 billion to $2 billion over the identical interval. Additional, the corporate generated round $500 million money from operations in fiscal 2019. This sturdy money place mixed with regular money from operations gives the corporate an affordable cushion to take care of the present disaster.
Conclusion
Phases of Covid-19 Disaster:
- Early- to mid-March 2020: Concern of the coronavirus outbreak spreading quickly interprets into actuality, with the variety of instances accelerating globally
- Late-March 2020 onward: Social distancing measures + lockdowns
- April 2020: Fed stimulus suppresses near-term survival anxiousness
- Could-June 2020: Restoration of demand, with gradual lifting of lockdowns – no panic anymore regardless of a gentle enhance within the variety of instances
- July-November 2020: Weak Q2 and Q3 outcomes, however continued enchancment in demand and progress with vaccine growth buoy market sentiment
With the current surge in the variety of new Covid-19 instances within the U.S., we see the rise in on-line exercise persevering with within the close to time period, driving up demand for routers and community switches. We imagine that Juniper Networks inventory has potential upside within the close to time period, and even because the lockdowns are progressively lifted, a drop in community software program and {hardware} demand doesn’t appear very seemingly. This might see JNPR inventory doubtlessly rise virtually 15% from its present degree.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.