Merrill Lynch's Top Networking and Security Picks for the Rest of 2017

Palo Alto Networks

This company was a momentum trader’s dream before crashing back to earth. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber threats, and it boasts a staggering year-over-year billing growth. Unlike fragmented legacy products, its security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content.

Palo Alto Networks security platform has new features that were introduced to help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products, and, instead, expand breach prevention capabilities and boost operational efficiency.

This company also posted better-than-expected fiscal third-quarter results in June. The analysts noted this:

Third quarter revenue of $432 million was $20 million better than expected, with most of the strength driven by product revenue upside. Products were $17 million higher than estimated, driven by improving sales execution & pent up demand for new firewalls. Reiterate our Buy as we believe sales execution issues are largely transitory and view management’s fourth quarter guide as likely conservative.

Merrill Lynch has set its price target at $170. The consensus price objective is $149.59, and shares closed Monday at $139.45.

Top Networking Picks


This is a top networking idea at Merrill Lynch. Commscope Holding Co. Inc. (NASDAQ: COMM) is a leading provider of antennas, cabling connectors and other connectivity equipment for enterprise and service provider customers. The company is a market leader in its three segments: Wireless, Enterprise and Broadband.

Top Wall Street analysts feel that company will be a big winner in data center build-out and fiber to the home arenas. The project the company has a 35% or so share of the fiber connectivity market, and in the firm’s view, a meaningful share of design wins at major U.S. carriers and enterprise buildings.

While first-quarter results were solid, the guidance was disappointing. The analysts lowered estimates at the time and noted this:

Revenue and earnings guidance ranges were lower than expected. Indoor network and copper declines, some US wireless pauses, and manufacturing integration issues impacted the outlook. We lower our estimates and price objective, but demand recovery, new products, and improved execution should help the second half.

The Merrill Lynch price target is $41. The posted consensus target is $42.88. Shares closed Monday at $35.45.

Juniper Networks

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 recently appointed Bikash Koley as the new chief technology officer. Wall Street is impressed with the choice because his resume appears to fit well with Juniper’s forward-looking strategy of pivoting toward the cloud, faster growth and software. Coming from Google, and having also worked at Ciena, means he has an appreciation of optical networking, in addition to the cloud and how hyper-scale and web 2.0 companies are thinking.

Shareholders receive a 1.36% dividend. The Merrill Lynch price target is $35, and the consensus price objective is $31.21. Shares closed Monday at $29.46.

These six top stocks to buy offer technology exposure without huge momentum multiples in an expensive and tired bull market. These could very well be some of the best tech plays over the next year to 18 months.

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