Earnings Preview: Juniper Networks

Juniper Networks (JNPR) is expected to report Q3 earnings Thursday Oct. 23 after the bell, with a conference call scheduled for 4:45 pm ET.

Guidance

The consensus estimate is 30c for EPS and $927.41M for revenue, according to First Call.

Analyst Views

On Oct. 17, Juniper shares jumped 7.2% after UBS upgraded the company to Buy, citing valuation and demand for networking gear in spite of the economic downturn. The firm said, while spending for telecommunications and information technology may decline in 2009, demand for routers is expected to grow. The UBS analyst said, "Although macroeconomic challenges may result in disappointments for Juniper over the next few quarters, they believe there are fundamental factors unique to the company that give the firm confidence it will achieve its second half of 2008 guidance, as well as achieve at least 10% revenue growth in 2009."

AT&T's (T) Q3 results reflect continued strong smart phone traction and a healthy capex level (particularly for 3G and IP). Overall, those results are viewed by analysts as a positive for its supply chain, with Juniper a beneficiary for the shift toward IP technologies.

In a recent note, Morgan Keegan was positive on Juniper, as it thinks the company's MX Ethernet switch product line has been well received at AT&T and has notched two contract wins, one for enterprise and one for access aggregation.

RBC Capital says Juniper's Q3 results may be strong and the firm is estimating revenues near the high end of the company's guidance range of $925M to $935M. And despite some fears that the company may have to lower the hurdle for the December quarter, RBC is of the view that the carrier pipeline, incremental enterprise contributions, and decent trends with Verizon (VZ), content service providers and cable customers may enable the company to maintain its prior implied revenue guidance of $958M to $988M, or up 18% to 22% YoY.

Key products such as the MX series and EX Ethernet switches may be helping Juniper maintain its sequential growth rate. There's been a CEO change at Juniper and RBC is hoping the company doesn't go crazy with acquisitions considering its spotty track record. Partnerships rather than outright acquisitions may be the wiser course, in RBC's view.