Analyst Note| Mark Cash |
No-moat Juniper Networks’ 2021 analyst day showcased opportunities in the wide area network, cloud data center, and enterprise areas of networking. Juniper expects to expand the WAN, its largest market, through 400Gb routing proliferation, 5G metro network upgrades, and network automation. Cloud data center growth can come from 400Gb switching upgrades, high-end firewall security, and closed loop assurance. Continuation of improving strength in the enterprise market comes from Mist Wi-Fi 6 access points, SD-WAN, and security. Juniper expects software to be a key differentiator across its portfolio. While we suspect conservatism with its outlook, the revenue growth and margin targets for 2021 and three years out largely match our previous expectations. Juniper was upbeat about having the right portfolio and strategy to take on leading market incumbents. While we think Juniper may make some share gains in some pockets of the overall market, Cisco and Arista possess potent customer switching costs that we expect to challenge Juniper's long-term growth. We are maintaining our $22 fair value estimate and view the shares as slightly overvalued.