Juniper, Vendors to Gain as Capex Spending Rises

A note from Jefferies & Co.’s George Notter on Wednesday may have helped push Juniper Networks (NYSE:JNPR) shares up $1.90, or 8 percent, to $24.47, Barron’s reported.

Notter wrote that after talking with people in the telecom industry, he thinks relief could be imminent for Juniper and other North American equipment vendors, because “capex spending will accelerate shortly among carriers such as AT&T (NYSE:T), Verizon Communications (NYSE:VZ) and Sprint-Nextel (NYSE:S).”

According to the note, a great deal of the expected increase could depend on AT&T passing its capex budget for 2012. “AT&T’s issue is that it’s 2012 capex budget hasn’t been ratified internally and passed down to the different areas of the business,” wrote Notting. “Vendors aren’t allowed to ship against their orders books until the budget is passed.” Notting said the budget is expected to be passed “any day now.”

Notting also notes that shareholders may not realize just how much of a boost equipment vendors may see as a result. “We think there’s a significant gap between perception and reality on capital spending in North America right now,” he said. “Moreover, we see a strong likelihood of upward Q1/Q2 earnings revisions for vendors with major exposures to AT&T, Verizon, and Sprint. Vendors with the largest exposures to these carriers include Alcatel-Lucent (NYSE:ALU), Adtran (NASDAQ:ADTN), Ciena (NASDAQ:CIEN), Juniper and Tellabs (NASDAQ:TLAB). Our favorite play is Juniper.” Notting rates Juniper a Buy, but gives other equipment makers an Underperform rating.

Here’s how these stocks closed the day:

Juniper Networks, Inc. (NYSE:JNPR): JNPR shares recently traded at $24.16, up $1.59, or 7.04%. They have traded in a 52-week range of $16.67 to $45.01. Volume today was 26,966,506 shares versus a 3-month average volume of 9,951,590 shares. The company’s trailing P/E is 30.58, while trailing earnings are $0.79 per share.

AT&T, Inc. (NYSE:T): T shares recently traded at $29.87, down $0.2, or 0.67%. They have traded in a 52-week range of $27.27 to $31.94. Volume today was 23,019,884 shares versus a 3-month average volume of 26,235,600 shares. The company’s trailing P/E is 45.26, while trailing earnings are $0.66 per share.

Verizon Communications Inc. (NYSE:VZ): VZ shares recently traded at $37.83, down $0.21, or 0.55%. They have traded in a 52-week range of $32.28 to $40.48. Volume today was 10,553,222 shares versus a 3-month average volume of 13,951,100 shares. The company’s trailing P/E is 44.51, while trailing earnings are $0.85 per share.

Sprint Nextel Corp. (NYSE:S): S shares recently traded at $2.26, down $0.05, or 2.16%. They have traded in a 52-week range of $2.10 to $6.45. Volume today was 35,048,827 shares versus a 3-month average volume of 38,513,100 shares. The company’s trailing earnings are $-0.96 per share.

Alcatel-Lucent (NYSE:ALU): ALU shares recently traded at $2.28, down $0.02, or 0.87%. They have traded in a 52-week range of $1.39 to $6.63. Volume today was 23,104,272 shares versus a 3-month average volume of 18,483,600 shares. The company’s trailing P/E is 7.26, while trailing earnings are $0.31 per share.

ADTRAN Inc. (NASDAQ:ADTN): ADTN shares recently traded at $37.88, up $0.39, or 1.04%. They have traded in a 52-week range of $25.46 to $47.70. Volume today was 1,106,490 shares versus a 3-month average volume of 922,952 shares. The company’s trailing P/E is 17.87, while trailing earnings are $2.12 per share.

CIENA Corp. (NASDAQ:CIEN): CIEN shares recently traded at $16.71, down $0.21, or 1.24%. They have traded in a 52-week range of $9.89 to $29.24. Volume today was 4,875,398 shares versus a 3-month average volume of 4,793,410 shares. The company’s trailing earnings are $-2.04 per share.

Tellabs Inc. (NASDAQ:TLAB): TLAB shares recently traded at $4.00, up $0.15, or 3.9%. They have traded in a 52-week range of $3.67 to $5.63. Volume today was 7,851,685 shares versus a 3-month average volume of 5,149,980 shares. The company’s trailing earnings are $-0.52 per share.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com