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Deutsche Bank downgraded Juniper Networks (JNPR
) to sell from hold.
Analyst Raj Srikanth says shares are trading at 5.2 times the enterprise value of 2003 sales vs. the peer group average of 1.9. He says despite the uniqueness of the company, a lack of positive earnings for both 2002 and 2003 should not warrant the current level of the premium.
Srikanth notes visibility continues to be poor. He says the core router business -- which pulls down one-third of the company's revenues -- will continue to be under pressure for at least two more quarters. Srikanth thinks current investor sentiment and upward momentum for equipment stocks has driven the company's valuation to unsustainable levels. He sees a four cent per share loss for both 2002 and 2003.