Two sub-sectors of technology that have performed very well recently are the networking equipment and information technology hardware arenas, and with good reason. After solid fourth-quarter reports, a ton of focus remains on cloud storage and computing and on mergers and acquisitions deals. Bottom line, investors have moved more capital toward the top stocks.
In a new research report, JPMorgan makes the case that while some of the optical names underperformed, they are expected to recover, as a real slowdown in the silo is very unlikely. The firm also has ranked its top picks in the networking/hardware areas, and while there is only one change in the top five, all look like solid buys now for more aggressive accounts. All are rated Overweight and here ranked from 1 to 5.
This smaller capitalization company remains in the number one slot and has solid upside potential. Viavi Solutions Inc. (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions to communications service providers, enterprises and their ecosystems, supported by a worldwide channel community including Viavi Velocity Solution Partners.
The company delivers end-to-end visibility across physical, virtual and hybrid networks, enabling customers to optimize connectivity, quality of experience and profitability. Viavi is also a leader in high-performance thin film optical coatings, providing light management solutions to anti-counterfeiting, consumer electronics, automotive, defense and instrumentation markets.
The analysts noted in their report:
We continue to see material upside to Viavi’s earnings from 3D sensing in the new iPhone as well as ongoing restructuring. We also believe accretive consolidation
deals are a possibility.
The JPMorgan price target for the stock is $11, and the Wall Street consensus target is $10.56. The shares closed Wednesday at $9.90.
This solid technology stock has been on a long roller-coaster ride for investors over the past two years. Juniper Networks Inc. (NYSE: JNPR) is a provider of high-performance network infrastructure to service providers and enterprises. Key products include IP-based routers for service provider core and edge networks, security solutions and high-end enterprise routing equipment. Juniper’s products support converged data, voice, video and wireless applications across extended networks.
The company reported strong fourth-quarter numbers but guidance was below expectations on gross margin pressures and higher operating expenses. Top analysts feel that new switches and routers should ramp up on cloud demand while other businesses like telecom and security stabilize.
Shareholders are paid a 1.41% dividend. JPMorgan has a $32 price target, and the consensus price objective is $28.43. The shares closed most recently at $28.30.