Merrill Lynch

initiated coverage on three networking companies Tuesday in a note that expressed long-term optimism about the Internet.

Analysts Michael Ching and Sam Wilson handed an accumulate rating to two firms,

Juniper Networks

(JNPR) - Get Report

and

Extreme Networks

(EXTR) - Get Report

, and rated the third,

Avici Systems

(AVCI)

, intermediate-term neutral, long-term accumulate.

The analysts set a $100 price target for Juniper, saying it has "emerged as one of the leading companies in the high-end router space." They also set a $48 target for Extreme Networks.

In early Tuesday

Nasdaq

trading, Juniper was up $5.25, or 6.4%, to $85.13, and Extreme was up $3.56, or 11.6%, to $34.25. Avici was up $2.13, or 8.3%, to $26.

The analysts also reiterated their ratings on

Cisco

(CSCO) - Get Report

(near-term accumulate, long-term buy) and

Foundry Networks

(FDRY)

(intermediate neutral and long-term buy).

In their report, Ching and Wilson said that although the near-term picture is cloudy, "Longer-term we are bullish on the Internet. The Internet continues to expand at breakneck speeds. Less than 5% of the world's population has Internet access at their home or work. Coming wireless and residential gateways will expand the amount of IP traffic from homes and individuals."