Juniper Networks’ stock plunged more than 6 percent early Thursday on the heels of the company lowering third-quarter 2017 result expectations. The company cited its cloud vertical business for the shortfall.
The company expects third quarter revenues to come in between $1.25 billion and $1.26 billion, which is short of the $1.29 billion to $1.35 billion previously forecast. Non-GAAP net income per share was trimmed and tightened from previous guidance of between $0.55 and $0.61 to new guidance of $0.54 to $0.56.
“We are confident in our company strategy, product roadmap, and strong positioning with our cloud provider customers as we continue to navigate and disrupt a very dynamic industry,” explained Juniper CEO Rami Rahim, in a statement. “Although we are disappointed in our lower than anticipated revenue, we remain focused on operational excellence, cost efficiencies, and delivering long-term, sustainable growth.”
Just months ago, Juniper CFO Ken Miller cited the vendor’s cloud business as a driver of its second quarter 2017 results. He noted the cloud vertical within the company grew 32 percent year-over-year.
“There is a broader opportunity in the cloud space, not necessarily with the hyperscalers, but the broader cloud market when you look at SaaS [software-as-a-service] providers, regional cloud providers, telco cloud: that’s here now that we are benefiting from,” Rahim said during the company’s second quarter results conference call.
Juniper is scheduled to release full third quarter results on Oct. 24.
RBC Capital Markets Analyst Mitch Steves, in a research note, indicated the firm’s own market checks have shown positive demand across the hyperscale/cloud space. He questioned whether Juniper’s announcement was “company specific or a demand pause for Juniper in Q3.”
Steves did positively spin that the new per-share guidance still left open the door for Juniper to meet the low end of its initial guidance. He did, however, cut the firm’s price target for Juniper’s stock from $30 to $27.
“We take our numbers and price target lower to reflect lower than expected results,” Steves wrote. “We think the stock will see support in the mid-20s given the company’s ability to protect operating margins in a lower than expected revenue environment.”
Financial firm William Blair maintained its “market perform” rating on Juniper’s stock, but lowered its full-year 2017 and 2018 revenue and non-GAAP earnings per share estimates.
“While management is doing a fine job controlling costs and funneling profits back to shareholders, the recurrence of margin pressure and muted revenue growth shifts the risk/reward equation toward neutral,” the firm wrote in a research report. “Moreover, challenging telco spending intermixed with security headwinds adds substantial risk to the story, in our view.”