F5 Shares Gain As Street Sees Strong 4Q
AP - Thursday October 4, 2:14 pm ET
F5 Shares Rise As Analysts See Strong Results Closing Out Fiscal Year
NEW YORK (AP) -- Shares of F5 Networks Inc., which develops software that manages computer network traffic, rose Thursday after analysts predicted the company will post strong results for its fiscal fourth quarter, despite costs related to a recent acquisition.
Shares of F5, which have traded between $26.77 and $46.93 in the past 52 weeks, rose $1.29, or 3.2 percent, to $41.27 in afternoon trading.
Banc of America analyst Tim Long said F5's core business remains brisk as it gains contracts to replace aging networking equipment from Nortel, Foundry and Cisco.
"We were told that F5 was unusually inactive on the discount and promotion front during the last weeks of the quarter, leading many partners to believe the company's quarter closed well," he said in a Wednesday note to clients detailing recent checks with distributors, resellers and customers.
Long, who has a "Buy" rating on the shares, said the company should post revenue of at least $145.5 million, above F5's guidance of $142 million to $144 million.
"We believe trends in the company's core business remain strong and that September quarter results will allay investor fears regarding a potential slowdown in the company's core," Long said. He maintained a $52 price target on the shares, implying he expects the stock to rise about 30 percent in the next 12 months.
Jefferies analyst Bill Choi said he expects demand for F5's products to remain hot and values shares at $50, a 25 percent increase over Wednesday's closing price, despite a $14 million charge related to the September buyout of network switch maker Acopia.
"F5's fundamentals remain compelling, with continued market dominance, superior execution, strong end-market demand and a solid product roadmap," Choi said in a client note.
The company's forthcoming introduction of its 8800 network switch and Montreal platform should help it to acquire additional telecommunications market share, Choi said.
In the U.S., where second-quarter revenue rose 25 percent over the year-ago period, growth should remain strong, he said. And despite a cooling IT market in Europe, Choi said F5 should continue to grow in Germany and the United Kingdom, powerhouses in that region's economy.
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