On Thursday, Juniper Networks Inc. (NYSE:JNPR) shares extended Wednesday’s gains by 1.28% amid reports about activist investor interest. News broke on Wednesday that Juniper was attracting the interest of an activist investor, with speculation the investor could force the company to separate its core switching and sourcing business from the AI and cloud business.
According to the report, the activist could also force Juniper for a strategic review or board changes. The company has underperformed the S&P 500 over the last 12 months with a gain of 22.9% compared to 30.2%.
Why buy Juniper Networks shares in August 2021?
From a valuation perspective, Juniper Networks shares trade at a trailing 12-month P/E ratio of 46.58 and a forward P/E ratio of 14.98. Therefore, value investors could find the stock compelling for a short-term investment.
However, analysts expect earnings to fall by 22% this year before increasing by about 12% next year, making the stock less compelling to growth investors. Nonetheless, if reports about an activist investor coming in come to fruition, Juniper Networks’ outlook could improve significantly.
Therefore, it would be best to keep a close eye on the activist investor news for the foreseeable future. But overall, Juniper’s current valuation coupled with a dividend yield of about 2.74% could boost the stock price in the short term.
Technical overview: Juniper Networks stock price forecast for Q3 2021
Technically, Juniper Networks shares seem to be trading within an ascending channel formation in the intraday chart. The stock price has recently spiked to rally closer to the overbought conditions of the 14-day RSI. However, there is still room left to run before crossing over to the zone.
Therefore, investors can target extended short-term gains at approximately $29.69 or higher at $30.20. On the other hand, the short-term support levels are $28.73 and $28.14.
Bottom line: the case for buying the Juniper Networks rebound
In summary, although Juniper Networks shares have failed to match the S&P 500’s performance over the last 12 months, reports about a potential activist investor interest could spark a significant bull-run.
Furthermore, the JNPR stock price seems attractively valued at a forward P/E ratio of just 14.98, while its current upward movement is yet to hit overbought conditions.
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Motiur Rahman
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