Juniper Networks, Inc. (JNPR): Well Fargo's Lowball $30-32 Target

Juniper Networks, Inc. (NYSE:JNPR) swam upstream today thanks to an upgrade from Well Fargo. Shares of the networking and communications company closed up 2.05% after analyst Jess Lubert changes his opinion to "Outperform" from "Market Perform" with a price-target range of $30-32 – potential upside of 13.68% to 21.21% as we type.

Juniper Networks, Inc. (Juniper Networks) designs, develops, and sells products and services that together provide its customers with network infrastructure. It operates in two segments: Infrastructure and Service Layer Technologies (SLT).

Lubert tell interested investors, "We are upgrading shares of Juniper to Outperform from Market Perform following a recent meeting with new CEO, Shaygan Kheradpir, which strengthened our belief that the company maintains the right products and strategy to capitalize on what appears to be a strong carrier spending environment entering 2014."

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Elaborating on his meeting and justifying his recommendation and price target change, the analyst went on, "We came away from our meeting with an ongoing sense of confidence that Juniper is committed to achieving the cost reduction initiatives and capital returns promised in the Integrated Operating Plan (IOP), which we think may drive more than $2.00 in non-GAAP EPS during 2015-- above the consensus of $1.89. We believe progress toward the plan's stated objectives may drive multiple expansion and material share price appreciation, while ongoing activist involvement may limit downside from current levels."

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Lubert believes 2014 EPS will come in at $1.62 in 2014 and $2.10 next year. Both are higher than the current consensus estimates of $1.55 and $1.89 for '14 and '15, respectively.

Since Wells Fargo appears to be making a price-to-earnings (P/E) based argument, let's examine JNPR's recent P/E history to see if $30-32 is high/lowballing.

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Since 2009, Juniper Networks traded with a P/E range of 15.97 to 138.74 with an average of 41.53. During the same timeframe, annual, average earnings growth was less than 3%, which means Wall Street has been willing to pay a substantial premium over bottom line growth.

Using Lubert's 2014 and 2015 estimates, JNPR's net profit would increase 34% this year and 29.63% next year. If P/E and earnings growth lined up one to one, then the tech company would price out at $55.08 and $62.22.

To trade at $32 with Wells' outlook requires a 2014 P/E of 19.75 and 15.24, which means JNPR would set a five year low for its price-to-earnings ratio; probably unlikely with profits marching ahead at nearly twice that pace.

Even at the industry average P/E of 14.22, Juniper shares would have a 2014 price tag of $23 for 2014 and $29.86 for 2015 using Lubert's numbers.

Overall: Thirty to Thirty-two dollars seems to be a lowball number for Juniper Networks, Inc. (NYSE:JNPR) based on Jess Luber'st projected earnings and growth rates considering JNPR's tendency to trade at a premium to EPS growth.