Goldman Sachs Has Juniper On Conviction Buy

Goldman Sachs is out with a research report on Juniper Networks (NASDAQ: JNPR) and it has Conviction Buy rating on shares.

In a note to clients, Goldman Sachs, writes "Expect solid quarter on strong carrier spending, despite investor jitters – We expect Juniper's results to be in line or better, which should offer relief, given recently lowered expectations and Juniper's 22% sell-off over the last three months (vs. NASDAQ +1% over the same period). We are modeling 2Q sales/EPS of $1.18 bn/$0.34, which compares to consensus at $1.15 bn/$0.34, and Juniper's guidance of $1.13-$1.18 bn/$0.31-0.34. There were several puts and takes in the quarter, which taken together, support our view that results will be solid. First, most concerns centered on Juniper's switching business, following the 1Q disappointment and CEO Kevin Johnson's comments about a “back-end-loaded quarter”. While the switching business is very sensitive to GDP growth, which clearly weakened during the quarter, we also got a number of datapoints that pointed to strength in IT spending, including our IT Survey, and earnings results from large-cap bellwethers such as IBM, EMC, VMware, and Intel, among others. Second, Juniper's service provider routing business should more than offset any potential business in switching, given it is five times as large. On that front, we are encouraged by AT&T and Verizon's stronger-than-expected capex spend in 2Q, as well as AT&T's $1 bn capex raise for FY11. Moreover, global capex spending trends are robust this year, with our bottom-up global capex model pointingto 11% capex growth in 2011."

Shares of JNPR gained 95 cents on Friday to close at $31.27.