Juniper Networks, Inc. (NYSE:JNPR), the industry leader in network innovation, recently won a deal from global web hosting provider PEER 1. Juniper’s integrated routing, switching and security technology is being used in PEER 1’s U.K. data center.
Juniper Networks, Inc. (NYSE:JNPR)’s close rival, F5 Networks, Inc. (NASDAQ:FFIV), designs and sells application delivery controllers, which are hardware appliances used in data centers. The company’s products simplify the management of data centers and delivery of services across diverse resources.
Analysts at Deutsche Bank are encouraged by product wins at Juniper Networks, Inc. (NYSE:JNPR) and have lifted the price target for the stock to $22.50. F5 Networks, Inc. (NASDAQ:FFIV) is also a stock to buy, according to Deutsche Bank, which has a $116 price target on the stock. In this post, I will focus on the growth catalysts for these two stocks.
Juniper’s growth catalysts
1. Product wins
PEER 1 Deal: Juniper’s networking solution will help PEER 1 lower server downtime in its flagship green data center in Portsmouth by approximately 33% compared with existing systems. This new facility offers Power Usage Efficiency (PUE) scores that are better than the industry standard.
CERNET Deal: Juniper recently announced that it has provided the China Education and Research Network (CERNET) with its advanced core routing solutions, the T4000 routers. Financial terms of the deal were kept confidential.
The Chinese government and the Chinese Ministry of Education jointly set up CERNET, which is a nationwide education and research computer network. It interconnects a number of Chinese Universities, educational institutes and research centers and is dedicated to support the country’s higher-education institutions. With Juniper’s T4000 routers, CERNET is now delivering ultra-fast broadband services to educational institutions and is helping the government to achieve the objectives of its education Project 211, which was initiated in 1995.
2. Software launches
In February, Juniper Networks, Inc. (NYSE:JNPR) unveiled its new software and services enabling mobile service providers to realize immediate benefits while laying the foundation to build software-defined networks, or SDNs. By deploying Juniper Networks’ new services provisioning application, mobile infrastructure application and virtualized services engine, customers can achieve elastic capacity and increased service velocity, while lowering overall operating expenses, or OPEX.
Based on use cases and data from ACG Research, customers may realize up to a 65% reduction in OPEX and up to a 54% reduction in total cost of ownership.
Juniper Networks, Inc. (NYSE:JNPR) also unveiled its new security line cards in February for its market-leading SRX5600 and 5800 Series Services Gateways. The solutions significantly improve performance and reliability for LTE mobile network operators. The new SRX Series line cards are the industry’s only high-end security solutions that can provide mobile operators with zero-downtime performance upgrades and scale to accommodate the exponential growth of network throughput.
F5 Networks’ growth catalysts
1. Growing Internet traffic
Global IP traffic has increased eightfold over the past five years and is estimated to be growing at a CAGR of 29% through 2016. A growing adoption of advanced video communications in the enterprise segment will likely fuel growth in enterprise traffic. Enterprise Internet traffic is expected to grow at an annual rate of 18%.
F5 Networks, Inc. (NASDAQ:FFIV) is expected to benefit immensely from growing Internet traffic. F5′s BIG-IP product family represents the majority of its sales and it supports a growing number of features and functions available as software modules and standalone applications. F5′s products and services are purchased by a wide variety of enterprises in technology, telecommunications, financial services, transportation, education, manufacturing, healthcare and the government sectors.
2. Shift to cloud-based services
Research firm Forrester projects the global market for cloud computing will increase from $41 billion in 2011 to $241 billion by 2020. Large corporations are increasingly turning to external third-party cloud providers for services and storage to lower their capital and operating costs.
To accommodate the dynamic needs of their clients, cloud providers are building large virtualized data centers to store clients’ data. The large amount of data is difficult to manage and costly to maintain. Such centralized file storage can slow access for remote users and applications. F5 Networks, Inc. (NASDAQ:FFIV)’s ARX product family of file virtualization solutions represents a unique set of capabilities that optimize the performance and utilization of network-attached storage systems.
Cisco: Rated buy at Deutsche Bank
As per research done by Cisco Systems, Inc. (NASDAQ:CSCO), the current data traffic in data centers is in the zettabyte range and by 2016 it’s expected to quadruple to 6.6 zettabytes annually. To capitalize on this, Cisco announced its networking strategy at Cisco Live with Open Network Environment, which includes an SDK and API called onePK for routing and switching platforms, such as the Integrated Services Router G2, Aggregation Services Router, Cloud Services Router and Nexus data center switches.
With Cisco selling physical and virtual networking, integrating the Nexus 1000v with multiple hypervisors and writing a module for Quantum support, it looks like the market leader in networking could also be a good bet for long-term investors. Cisco is rated buy at Deutsche Bank, with a $24 price target. The Thomson First Call consensus for the networking giant is also $24.
Conclusion
I feel encouraged by the rapid deployment of Juniper Networks, Inc. (NYSE:JNPR)’s networking products and services by organizations and government verticals to meet growing business demand. On the other hand, F5 Networks, Inc. (NASDAQ:FFIV) is well-positioned in the networking space and ready to capitalize on much of the worldwide spending on information technology. Both the two stocks are poised to outperform the broader market in 2013 and I would recommend buying the stocks on dips.
The article These Two Networking Giants Are Poised to Outperform originally appeared on Fool.com and is written by Anindya Batabyal.
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