Juniper Reaches 52-Week High After Issuing Bullish Forecast

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Juniper Networks Inc. shares reached their highest level in a year, after the maker of Internet routing equipment beat estimates for sales and issued a bullish forecast.

First-quarter earnings excluding certain costs were 32 cents a share, on sales of $1.07 billion, the Sunnyvale, California-based company said in a statement of preliminary results Thursday. Analysts on average expected profit of 31 cents a share on sales of $1.05 billion, according to data compiled by Bloomberg.

Juniper forecast earnings from 38 cents to 42 cents a share for this quarter and revenue of $1.09 billion to $1.12 billion. Analysts had estimated earnings of 38 cents a share and sales of $1.1 billion.

“The company continues to see the long-term demand drivers as healthy and is confident in its innovation pipeline. Juniper expects to return to its historical pattern of higher revenue in the second half of 2015 versus the first half,” Juniper said.

RBC Capital Markets on Friday raised its rating on Juniper to outperform from sector perform.

The shares rose 8.9 percent to close at $26.14 in New York, the highest value since April 3, 2014.

Acquisition Rumors

Juniper’s report decreased the odds that the company will be acquired, said Jason Noah Ader, an analyst at William Blair & Co.

“If they’d missed, maybe the board would have thrown in the towel,” he said. “Now, they’re less likely to sell -- and they will probably be more expensive.”

Rumors of an acquisition bid by Ericsson AB have swirled since Nokia Oyj said this month that it would buy Alcatel-Lucent SA. The new Nokia would be a leader in equipment for wired and wireless networks, while Ericsson specializes in wireless gear. Ericsson long has had a deal to resell Juniper’s routers and it would make sense for the Swedish company to own the technology outright, Pierre Ferragu, an analyst at Sanford C. Bernstein Ltd., wrote when the Nokia deal was announced.

Net income fell to $80.2 million from $110.6 million a year earlier. Sales fell 8.8 percent.

Juniper spent much of last year honing its strategy and cutting costs amid pressure from activist investor Elliott Management Corp. After third-quarter earnings fell short of Juniper’s forecast, the board in November appointed Rami Rahim to replace Chief Executive Officer Shaygan Kheradpir, who had been in the job less than a year.

Juniper in March unveiled new models for several key products. The company relies heavily on sales to U.S. telecom carriers such as AT&T Inc. and Verizon Communications Inc., who are expected to increase equipment purchases in the second half after licensing new wireless spectrum earlier this year.

Seeking Stability

“Investors are looking for stability more than anything else from Juniper right now,” said Ader, of William Blair. “Our hope is they can create a baseline and get a lift as carrier spending comes back and sales of the new products kick in.”

Juniper and other established networking-equipment companies such as Cisco Systems Inc. face longer-term competition from software makers who ship code that is used on commodity gear made by companies including Dell Inc. and Quanta Computer Inc. Also, some large carriers want to reduce spending on routers by embedding the necessary technology into equipment that transmits data over fiber-optic lines. Juniper doesn’t sell such optical gear.

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