Juniper Gets Juiced

A rally accelerates on a JPMorgan upgrade.
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Juniper (JNPR) - Get Report optimists are peering through the fog.

It hasn't exactly been a banner year for the Sunnyvale, Calif., Internet gearmaker, but investors seem to think the worst is over and one skeptic is now convinced that Juniper has a bright future again.

After stumbling with a disappointing entry into the office networking market, Juniper also started losing momentum in its core router business thanks to infrastructure giant

Alcatel

(ALA)

and resurgent rival

Cisco

(CSCO) - Get Report

. Then, some incredibly well timed employee stock options pulled the company into a seriously distracting federal investigation, and gave investors yet another reason to be cautious.

"The stock has been under a cloud of the 'double-whammy' of poor fundamental performance and the options overhang," JPMorgan analyst Ehud Gelblum writes in a research note Tuesday, where he upgraded the stock to a buy.

Gelblum says the current quarter will probably mark the low point in terms of year-over-year sales comparisons. He predicts Juniper's sales will be "reaccelerating" next year as Internet expansion plans keep the pedal down on spending.

Despite all the missteps, Juniper is still on fairly solid ground. The spread of data networks, fueled by faster connections and broader business applications like telephone over Internet protocol and video conferencing, means telcos are eager to buy more gear.

Gelblum points to contract wins with heavy spending outfits like

Verizon

(VZ) - Get Report

and Japan's

NTT

(NTT)

that will presumably figure strongly in Juniper's revenue column next year.

Juniper shares hit a three-year low in August but have climbed 74% since then. The stock was up 85 cents to $21.33 in midday trading Tuesday.