Fans Juiced for Juniper - TheStreet

Fans Juiced for Juniper

A UBS upgrade paves the way for a rally ahead of postclose earnings.
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A new year. A new set of executives. And now Juniper (JNPR) - Get Report fans want some new sales growth.

Investors will be watching for signs of vigor from the Sunnyvale, Calif., Internet gearmaker when it delivers first quarter results after the market's close Monday.

With gear peer

Cisco

(CSCO) - Get Report

hitting on all cylinders of late, industry watchers are somewhat optimistic that Juniper is enjoying some of the same equipment spending trends.

"We believe

the company had a strong infrastructure quarter, both at the core and edge with solid growth in security sales," UBS analyst Nikos Theodosopolous wrote in a Juniper preview report. Early Monday, UBS upgraded the stock to buy from neutral, citing strong demand from the likes of

Verizon

(VZ) - Get Report

.

As cylinders go, that's just about everything under Juniper's hood.

The concerns of course have more to do with the bottom line and, more specifically, the company's margins.

After stumbling badly over the past two years, Juniper has been trying to rebuild its research and development efforts and its sales teams. It's a costly process but necessary, say analysts, if the company hopes to win back some of its businesses.

This process has been lengthy and not particularly rewarding for shareholders so far, though shares have rallied off last summer's lows in the low teens. Juniper fell 7 cents Friday to $20.50, putting them within a dollar and change of their 52-week high.

"Juniper continues to focus on the margin re-expansion that we expect to happen at some point over the next 4-6 quarters as the company emerges from its current investment cycle -- both in its products and in its salesforce," J.P. Morgan analyst Ehud Gelblum wrote in a research note.

Analysts say they expect Juniper's operating margins, the percentage of proceeds remaining after subtracting all operating costs, to hit about 20% in the first quarter and to rise slightly over the coming quarters.

On earnings, analysts are looking for an adjusted profit of 19 cents a share on sales of $621 million, according to Reuters Research.

Despite the favorable industry trends like telcos increasing network investments to keep up with surging data and video traffic, Juniper still managed to wander off course.

A poorly integrated network security acquisition added to the distraction. That condition was only made worse by a stock option backdating inquiry that put a pall over the company. And soon after came the firings.

Five of Juniper's top executives, not including CEO Scott Kriens, left the company over the past 16 months. That's not usually a sign that things are humming along just fine. But some observers see the shakeup as a sort of new beginning.

"We are concerned with the lack of management stability at Juniper," Merrill Lynch analyst Tal Liani writes in a recent note. "Yet," he says, we "believe that the changes could be a positive sign."