High Hopes for Juniper - TheStreet

High Hopes for Juniper

Investors bet the Cisco rival will post a strong quarter after today's close.
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Restaffed and reloaded, Juniper (JNPR) - Get Report marches ahead on its turnaround path.

Investors will check in for a progress report Wednesday afternoon, as the Sunnyvale, Calif., Internet infrastructure maker is due to post second-quarter results.

Juniper will likely show solid numbers, and investors, given the stock's rise, are hoping for strong guidance. But avid bulls may not see enough red cape to keep charging ahead.

Analysts estimates call for an adjusted profit of 20 cents a share on sales of $650 million in the second quarter, according to Reuters Research.

But some fans are more optimistic. "We estimate sales of $674 million, with the upside primarily from infrastructure products," UBS analyst Nikos Theodosopoulos writes in an earnings preview. Theodosopoulos also expects the company to post 2007 revenue of $2.84 billion, which is above the $2.65 billion the company has forecast.

The stock is up a third since the company reported first quarter results in April, and it is up 88% over the past year as investors bank on the recovery theme.

The company got what could be considered a management restart last year. A shakeout helped usher out five top executives but spared CEO Scott Kriens. The departures were part of a two-year stumble that included a disappointing entry into data and network security gear for big business and a stock-option backdating review.

Juniper's biggest woes have subsided for the most part. But the hotly anticipated gangbuster sales of its new-generation routers are still two quarters away.

Some observers are urging a little caution as expectations and the stock's momentum rise faster than the business can justify.

"We believe the turnaround we are looking for may not be evident for another few quarters," JPMorgan analyst Ehud Gelblum wrote in a research note.

The big catalyst for Juniper's resurgence is its new T1600 high-capacity core router that will offer a formidable challenger to rival

Cisco's

(CSCO) - Get Report

CRS-1 product. Routers are the brainworks that help telcos direct network traffic.

If the T1600 is successful, it will help Juniper win back the business it lost to Cisco over the past year and a half. But revenue from the new box isn't expected to hit Juniper's books until the fourth quarter.

Still, the spending trends are generally favorable as phone companies and network operators look to expand capacity.

Some analysts feel the warmth spreading across the data networking sector, and this should be evident in a few upcoming earnings reports.

"The small and mid cap data networking group may report strong results for the June quarter and also provide solid guidance as we move into September," RBC Capital analyst Mark Sue writes in a note. Specifically, he says, "we're looking for

Foundry

(FDRY)

,

F5

(FFIV) - Get Report

and

Netgear

(NTGR) - Get Report

to beat the consensus top line."