Over the last couple of decades or so technology has evolved and over time the benefits of using the internet have become apparent to the public. Additionally, increased adoption and implementation of cloud services and hybrid work structures are propelling the growth of the networking industry. Currently, 4.95 billion people use the internet daily worldwide. The figure underscores 6.2% year-over-year growth, which is the fastest since 2019. In the US alone, nearly 299 million people accessed the web in 2022.
In addition, network infrastructure market revenue is expected to reach $197.40 billion in 2022. According to Statista, the market is expected to reach $229.70 billion by 2026, growing at a CAGR of 3.9%.
The Invesco Dynamic Networking ETF (PXQ) has gained 2.9% over the past month, compared to the marginal gains of the S&P 500 over the same period. Therefore, we believe that fundamentally sound networking stocks Juniper Networks, Inc. (JNPR), Extreme Networks, Inc. (OUTSIDE) and Nokia Oyj (NOK) could skyrocket in the near future and, therefore, could be solid buys now.
Juniper Networks, Inc. (JNPR)
JNPR is a developer and marketer of networking products, including routers, switches, network management software, network security products, and software-defined networking technology. The company offers its products to cloud end users, service providers and enterprise markets.
On June 7, JNPR and cybersecurity firm Dragos announced their joint partnership to secure critical infrastructure, which is expected to provide cybersecurity visibility across IT and OT domains. This could prove profitable for the company.
The company announced the expansion of its SASE offering with the addition of Cloud Access Security Broker (CASB) and advanced data loss prevention (DLP) features to its Juniper Secure Edge solution. Samantha Madrid, Group Vice President of Security Business & Strategy, JNPR, said, “Now, with the addition of CASB and DLP, Juniper addresses these concerns with a full suite of SASE features that are flexibly adopted and deployed. while extending Zero Trust principles. already implemented through the network to the cloud.
JNPR’s total net revenue increased 8.7% year-on-year to $1.17 billion in the first quarter ended March 31. Non-GAAP net income and non-GAAP net income per share were $101.60 million and $0.31, up 3.1% and 3.3%. the same period last year. Non-GAAP operating income improved 5.6% from the prior year quarter to $137.40 million.
The consensus EPS estimate of $0.45 for the second quarter (ending June 2022) indicates a 3.5% year-over-year improvement. Similarly, the consensus revenue estimate of $1.26 billion for the same quarter reflects a 7.3% increase over the same period last year. Additionally, JNPR has an impressive surprise earnings track record, beating consensus EPS estimates in three of the past four quarters.
The stock has gained 10.4% over the past year and 0.6% intraday to close yesterday’s trading session at $30.89.
JNPR POWR Rankings reflect this promising prospect. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
JNPR is also rated B in growth, value and quality. Within the Technology – Communication/Networking industry, it is ranked #5 out of 54 stocks. To see additional POWR ratings for Sentiment, Stability, and Momentum for JNPR, Click here.
Extreme Networks, Inc. (OUTSIDE)
EXTR operates as a software-driven networking solution provider that designs, develops and manufactures wired and wireless network infrastructure equipment and engages in software development.
The company recently introduced a suite of new solutions, expanding its ExtremeCloud portfolio to include new SD-WANs and AIOps with digital twin capabilities. The new suite of solutions could significantly increase the company’s revenue stream.
In May, the company announced an increase in its share buyback authorization to $200 million over a three-year period beginning in its next fiscal year beginning July 1. This could bolster the company’s shareholder returns.
During the fiscal third quarter ended March 31, EXTR’s net sales were $285.51 million, up 12.7% year-over-year. Non-GAAP net income and non-GAAP net income per share increased 32.6% and 31.3% from the prior year period to $27.42 million and 0.21 $.
Analysts expect EXTR’s fiscal 2022 revenue (ending June 2022) of $1.10 billion to increase 9.3% year over year. For the same year, Street expects EPS to improve 35.8% from a year earlier to $0.77. EXTR has exceeded consensus EPS estimates in each of the past four quarters, which is impressive.
EXTR has gained 3.3% over the past month and is currently trading at $10.16. It has gained 2.6% over the past five days.
It’s no surprise that EXTR has an overall A rating, which translates to a strong buy in our POWR rating system. The stock has a B rating for growth, value and quality. It is ranked #2 in the Technology – Communication / Networking industry.
Beyond what we’ve stated above, we’ve also given EXTR ratings for Momentum, Stability, and Sentiment. Get all EXTR odds here.
Nokia Oyj (NOK)
NOK is a multinational company based in Espoo, Finland, which offers mobile, fixed and cloud network solutions. The company operates through the four major segments of mobile networks; Network infrastructure; cloud and network services; and Nokia Technologies.
This month, NOK announced its partnership with DOCOMO and NTT to jointly develop key technologies for 6G. The collaboration will focus on two proofs of concept for emerging 6G technologies. This collaboration could benefit the company by helping it achieve 6G technologies.
In May, NOK announced the strengthening of its partnership with Microsoft Corporation (MSFT) with plans to integrate Microsoft Azure Arc functionality into the Nokia MX Industrial Edge (MXIE) platform. Stephan Litjens, Vice President of Nokia Enterprise Solutions, said: “Our extensive collaboration with Microsoft will enable and improve the performance of critical Industry 4.0 applications, enabling our customers to leverage Microsoft Azure Arc in the cloud and at periphery of the customer’s site.
For the first fiscal quarter of 2022, NOK’s net sales increased 5.4% year-on-year to 5.35 billion euros ($5.72 billion). Gross margin increased by 270 basis points to 40.6%. Net cash and interest-bearing financial investments increased by 32.9% compared to the same period last year to reach 4.90 billion euros ($5.24 billion).
Street’s FY2023 EPS estimate of $0.47 indicates a 6.4% increase over the prior year. Similarly, Street’s revenue estimate for the same year of $25.69 billion reflects a 2.5% year-over-year increase. NOK has beaten consensus EPS estimates in each of the past four quarters.
Over the past three months, NOK shares have gained 11.9% and 2.2% over the past month to close yesterday’s trading session at $5.07.
NOK’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system.
NOK has a B rating for value. It is ranked #11 in the Technology – Communication / Networking industry. Click here to see additional POWR ratings for NOK (Growth, Momentum, Stability, Sentiment and Quality).
JNPR shares were trading at $30.30 per share on Wednesday afternoon, down $0.59 (-1.91%). Year-to-date, the JNPR is down -14.05%, compared to a -13.26% rise in the benchmark S&P 500 over the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. After…