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Technology Stocks : F5 Networks, Inc. (FFIV)
FFIV 260.41-0.1%3:59 PM EST
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From: Moonray11/20/2009 10:51:31 AM
   of 1801
 
F5: Aruiga Downgrades To Hold
NOVEMBER 20, 2009, 9:39 AM ET - Eric Savitz

F5 Networks (FFIV) shares are coming under selling pressure this morning after Auriga USA analyst Tony Carbone cut his rating on the stock to Hold from Buy.

Carbone notes that the stock is up 17% since reporting “stellar” FY Q4 results on October 21, and advises that the time has come to take profits. He keeps his $48 price target; the stock closed yesterday at $48.37.

“We remain constructive that F5’s commanding lead in application delivery controllers is likely to grow, given the velocity of innovation remaining in the market and the company’s ability to increase performance and functionality relative to the competition,” he writes. Carbone adds that “in the intermediate and long term,” revenue will be driven by advances in adjacent technologies, such as virtualization and cloud computing.

Enterprise spending, he says, is rebounding after almost 18 months of constrained budgets.However, he writes that he has concerns about increasing R&D intensity and the corresponding impact on margins. “With the stock trading relatively in-line with its historical five-year median forward 12-month P/E at peak operating margins,”he concludes, “we consider the shares fairly priced.”

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