CSCO, JNPR, FFIV, RVBD Sufficiently ‘Cloudy’ for Citi

Citigroup’s Kevin Dennean nowadays started out coverage of 4 networking stocks with obtain ratings, writing that though company knowledge networking sales won’t outperform overall IT spending, nevertheless there’s the prospect for growth in sales to phone firms, given their “still incomplete move to IP-based networks and layer 4-7 switching/routing.”

Dennean started F5 Networks (FFIV), Juniper Networks (JNPR) Riverbed Technology (RVBD), and Cisco Systems (CSCO) with obtain ratings, with worth targets of $130, $22, $22, and $19, respectively.

Dennean describes individual segments networking equipment markets as being additional or less exposed to “cloud computing,” with consequent growth prospects:

WAN Optimization (“WOC”), Application Delivery (“ADC”), carrier routers, knowledge center switches, and network security are “cloudy” within the sense that they’re integral elements of next-generation network architectures, and have above average growth and margins. though carrier switching and next-generation optical transport (WDM and OTN) have sturdy growth profiles, we have a tendency to believe margins and therefore the high range of competitors build these less enticing markets […] Enterprise routers have a healthy revenue outlook and solid margins, however we have a tendency to believe are less “cloudy” given overall macro-sensitivity. ancient Enterprise switching still has fairly wealthy margins however has largely entered an ex-growth phase; we have a tendency to believe margins are comparatively stable given a healthy business structure. Set-Top Boxes can see modest declines over following few years because of saturation and technology displacement as video increasingly moves to the cloud.

Dennean then goes on to explain how well every company is “positioned” with respect to those segments. He sees F5 as maybe the most effective positioned. Juniper may gain advantage from sales of routing to carriers within the latter half the year, and he labels its stock a “tactical obtain.” And he likes the merchandise portfolio at Riverbed, though he thinks it’ll “take time” for his optimism to play out.

Shares of 3 of the four are higher, with Riverbed up fifty cents, almost 3%, at $17.56, Cisco up fourteen cents, or 0.8%, at $16.72, and Juniper higher by twenty six cents, or 1.6%, at $16.83, whereas F5 is down six cents at $101.49.