Juniper: Street Largely Unimpressed By Q1 Results

The Street seems decidedly uninspired by Monday night’s first quarter earnings report and second-quarter guidance from Juniper Networks (JNPR).

Piper Jaffray’s Troy Jensen, in fact, cut his rating on the stock to Market Perform from Outperform, asserting that the stock is “fairly valued” at current levels. Through Monday, the stock had been up 11.5% year to date. “The high end of Juniper’s 2007 guidance implies a year-over-year growth rate of roughly 17%, and we believe this might be the peak year given the law of large numbers,” he wrote in a research note.

Other comments were subdued, even from the bulls. Here is a sampler:

Ryan Hutchinson, W.R. Hambrecht: While we still favor JNPR shares longer term, growing pains persist and we are not expecting much in the way of operating margin expansion in 2007…until we see some leverage in the model, we are maintaining our Hold rating and believe JNPR shares have little upside trading at 3.5x our 2008 EV/revenue estimate and 22x our 2008 EPS estimate.

Paul Mansky, Citigroup: Although instant gratification is not likely, we continue to view JNPR shares as attractive over the 12-18 month horizon.

Brantley Thompson, Goldman Sachs: Juniper needs to continue to invest heavily and with the correct management decision, it limits potential near-term earnings upside…We remain concerned about the near-term top-line outlook, as this quarter’s sales relied on the recognition of some deferred revenue.

Tal Liani, Merrill Lynch: The 1Q numbers were not clean and were subject to management’s efforts to defer recognition of revenues to smooth out earnings. We believe the quarter was generally weak and the stock could come under pressure in the near term.

Mark Sue, RBC: Not overly compelling in our view considering the modest outlook for growth and the slide in gross and operating margins…outlook for router growth remains healthy and may even accelerate this year driven by the growth in video traffic. However, concerns related to Juniper’s resellers and also the moving parts with its executive team may keep the multiple in check.

Kenneth Muth, Robert W. Baird: JNPR is currently fairly valued given product cycle uncertainty and the numerous R&D projects the company is undertaking.

Juniper was down 31 cents at $20.80.

JNPR 1-yr chart: