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Juniper Outlook Brightens

Wall Street believes the worst is behind the router maker.

After nearly a year of disappointments, Juniper (JNPR) - Get Juniper Networks, Inc. (JNPR) Report 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) - Get Cisco Systems, Inc. Report

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) - Get China Telecom Corp. Ltd. Sponsored ADR Class H Report

show the company is back in the game, says Sue.

Cruising
Juniper's turnaround

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It gives "us additional confidence that Juniper has fixed most of its internal concerns and is starting to re-grow its top line again," writes Sue, who has a neutral rating on the stock.

Earlier this year, Juniper lost some of its router prowess as giants like Cisco,

Alcatel

(ALA)

and even a reinvigorated

Redback

(RBAK)

made inroads to the thriving edge-router segment of the market.

But apparently Juniper has convinced

Verizon

(VZ) - Get Verizon Communications Inc. Report

that its E320 edge router is a winner, and that puts the supplier in line for some of the

billions upon billions the big telco is spending on its fiber optic expansion project.

"We believe the E320 platform was recently selected as the exclusive edge-routing platform for Verizon's GPON architecture, based on our recent channel checks, which should spur the reacceleration of revenue growth," JPMorgan analyst Ehud Gelblum wrote in a note Monday.

Gelblum summarized the bulls' thinking, or at least the hopes, in his investment thesis Monday.

"We believe the worst is behind it," Gelblum writes about Juniper. "And the stock should continue moving in the right direction once revenue growth begins."