The Zacks Analyst Blog Highlights:Juniper Networks, Goldman, Sachs, Cisco, AT&T and Honeywell International

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Mar 07, 2014, 09:30 ET

CHICAGO, March 7, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Juniper Networks Inc. (NYSE:JNPR-Free Report), Goldman, Sachs & Co. (NYSE:GS-Free Report), Cisco (Nasdaq:CSCO-Free Report), AT&T (NYSE:T-Free Report) and Honeywell International Inc. (NYSE:HON-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Juniper Networks: Strong Buy

On Mar 5, 2014, Zacks Investment Research upgraded Juniper Networks Inc. (NYSE:JNPR-Free Report) to a Zacks Rank #1 (Strong Buy) based on the positive estimate revisions witnessed over the last 30 days.

Why the Upgrade?

Juniper has been witnessing positive estimate revisions for the fiscal 2014 which led the earnings per share to rise from $1.04 to $1.14 over the last 30 days.

Moreover, some of the optimism was due to positive news flow over the couple of weeks. Recently, Juniper entered into an accelerated share repurchase (ASR) agreement with Barclays Bank plc and Goldman, Sachs & Co. (NYSE:GS-Free Report) as part of its new capital allocation strategy.

Per the agreement, Juniper will purchase shares worth $1.2 billion from the two entities with the cash in hand. Juniper's new capital allocation strategy also requires it to return $3 billion over the next three years. Per the strategy, shares worth $2 billion are to be repurchased (including the current ASR program) by the end of the first quarter of 2015. The balance is to be distributed as dividends that will be initiated from the third quarter of 2014.

Moreover, the company expects to streamline its cost structure and business model with One-Juniper initiative. As part of this initiative, the company will combine its engineering teams, go-to-market teams and research & development teams to provide a comprehensive and innovative solution to customers.

Additionally, increased spending by service providers should support Juniper's near-term fundamentals. The company's expansion into the software defined network segment is expected to strengthen its position in the networking space.

While the company's new products, cost reduction initiatives and improving execution remain the growth catalysts, increasing competition from Cisco (Nasdaq:CSCO-Free Report) and AT&T (NYSE:T-Free Report), uncertain economic conditions and constricted federal spending are the possible headwinds.

Honeywell Upbeat on Long-Term Outlook

Diversified conglomerate Honeywell International Inc. (NYSE:HON-Free Report) recently offered a long-term outlook on its business and growth strategy spanning the next five years. The company also maintained that it will excel the set targets if we go by its operational performance in the last five years. Over the said period Honeywell achieved a total shareholder return of 219%, approximately 1.7x the S&P 500.

Honeywell expects to organically increase overall sales in 2018 by $7–$12 billion to $46–$51 billion. Segment operating margins are expected to improve 220–370 bps over 2013 levels to 18.5%–20.0%, leading to double-digit earnings growth and almost a two-fold increase in the cash flow.

This in turn will enable the company to pursue strategic mergers and acquisitions, engage in opportunistic share buybacks, and maintain competitive dividends. Over the next five years, Honeywell aims to deploy over $10 billion for strategic acquisitions.

In order to successfully achieve the target by leveraging its process enablers and building on the "One Honeywell" culture, the company has also initiated certain operational tools. The latest among these include Honeywell User Experience (HUE), an innovative approach to designing and developing new products and services. HUE deploys rapid prototyping and other design principles for faster cycle time. This makes Honeywell products and services more user-friendly, intuitive and more productive and will inevitably lead to increased customer value and loyalty.

Honeywell also continues to embed software into its products and services to improve the product development process. The company is focused on the global achievement of CMMI (Capability Maturity Model Integration) Level 5 accreditation, which will improve the quality and efficiency of its software development. Together with other key process enablers such as the Honeywell Operating System (HOS), Functional Transformation (FT) and Velocity Product Development (VPD), the company is well poised to reach its target.

At the same time, Honeywell reiterated its guidance for 2014. Earnings are expected in the range of $5.35 to $5.55 per share on sales of $40.3–$40.7 billion. Operating margin is projected in the range of 15.2%–15.5%, while free cash flow is expected in the band of $3.8–$4.0 billion.

We are encouraged by management's continued efforts to drive organic growth while expanding its business in new geographical regions. Honeywell currently has a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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