Juniper Networks (JNPR) is being upgraded to buy at Jefferies with a $42 price target, as the investment firm believes the networking giant should benefit from a surge in capex spending.
Juniper Networks shares are up more than 3% to $32.50 in Tuesday trading, implying a near 30% upside to Jefferies' price target.
Analyst George Notter believes that Juniper Networks is likely to benefit from three trends: expanding service provider capital budgets from rivals; growth in ICP capex budgets; and a $100 billion in federal subsidy and stimulus for broadband network infrastructure over the next five to seven years.
The company also has product cycle refresh, including the ACX routing platform and the Mist portfolio that should provide a "favorable set up" for the future.
Notter also pointed out that it's the "best service provider capex environment in 20 years", adding that Juniper Networks should benefit "significantly" from infrastructure investments. The analyst also notes that 2022 Wall Street estimates for Juniper Networks look "beatable", as he expects the company will see 5 points of revenue growth from price increases. Coupled with new products and if there are any improvements in the supply chain, Notter expects Juniper Networks could generate additional revenue growth.
In October, Juniper Networks expressed concerns that the supply chain would weigh on gross margins for the fourth-quarter.
