Juniper Outlook Brightens

After nearly a year of disappointments, Juniper (JNPR Quote) is starting to regain some fans on Wall Street.

The Sunnyvale, Calif., Internet gearmaker stumbled through a rough stretch after security-system acquisition Netscreen failed to open new revenue doors. Meanwhile, rivals started stealing market share in its edge-router business, causing sales to take a dip. Then, more recently, the excellent timing of a few stock-option grants caught regulators attention.

Juniper shares hit a three-year low in August as investors gave up on the pesky Cisco (CSCO Quote) challenger. But since that $12.09 bottom this summer, the stock has bounced back with a 30% gain.

Though there are still serious concerns about what the stock-option backdating investigation will reveal, some analysts have gotten cautiously optimistic about Juniper's business prospects.

A big part of Juniper's appeal, despite the company's foibles, is the continuing growth of data traffic. Faster home connections, combined with Internet protocol's spread throughout business networks, are requiring more capacious traffic-management devices. This is just the sort of Net infrastructure gear that Juniper has built its fortunes on.

"Router market growth may be accelerating, and Juniper has worked to rectify numerous execution issues," RBC analyst Mark Sue said in a research note last week.

New contracts with outfits like China Telecom (CHA Quote) show the company is back in the game, says Sue.