ISI Group’s Brian Marshall today reiterates a Buy rating on shares of Juniper Networks (JNPR) and a $30 price target, writing that “out of the 11 IT Hardware & Data Networking companies we cover, it is our view JNPR offers investors one of the most robust product cycles for 2012.”
The note is actually part two of what Marshall bills as a four-part series. In the first part, published October 24th, Marshall wrote that the new “T4000” core router from Juniper is the company’s biggest product upgrade, and that it could generate “incremental” revenue of $250 million next year.
Today, Marshall writes that many carriers who want to cut costs of building and managing their networks will be interested in Juniper’s “PTX,” or “packet transport switch,” a machine combines optical switching and “MPLS” switching. That device could generate an incremental $75 million in 2012.
Carriers may use the PTX as a simpler switch for the core of their networks and make more complicated switches such as the T4000 the main device at the “edge” of their networks, Marshall writes.
Marshall’s assumption is that the industry as a whole ships 5,048 units of “core” networking equipment in 2012, and that Juniper sells 70 of the PTX, or 1.4% of those core network elements, assuming a 5% “attach rate” to its T-Series switches. At a price of $1.101 million per unit, that adds up to $76.9 million in revenue in 2012.
Marshall sees that number jumping in 2013:
Our analysis represents a ~5% attach rate with T-Series units in CY12, well within the 30-50% of JNPR�s Service Provider installed base who we think could find significant efficiencies from PTX. While not a large revenue mover for CY12, we think the potential CY13 opportunity could be ~$250+ million based on ~5% share for PTX in the SP core and a ~17% attach rate with T-Series sales.
Juniper shares today are down 34 cents, or 1.4%, at $23.64.
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