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Fri, Jan. 15, 11:22 AM
- Believing enterprise storage sales cycles are lengthening as companies mull cloud migrations and stating its application delivery controller (ADC) checks came back weak, Sterne Agee has downgraded F5 (FFIV -2.2%) to Neutral, and cut its target by $25 to $105.
- Sterne: "[S]pecific F5 Networks/ADC data from our survey that continues to point to 1) a tepid market growth rate of 3-5% and 2) a moderate impact on the company's traditional ADC business ... We recognize sentiment is heavily depressed ahead of an upcoming product cycle but believe our data outlines several headwinds that will cap multiple expansion for the stock."
- Yesterday, Barclays' Mark Moskowitz downgraded to Underweight, arguing cloud adoption is hurting F5's ADC sales, that its low-end hardware sales could be hurt by virtual (software-based) ADC adoption (ed: F5 is a major player in the virtual ADC market as well), and that the return on new security/services initiatives remains unknown.
- Deutsche downgraded on Tuesday, while citing a longer-than-expected timeframe for security sales to ramp. Also downgrading in recent months: Nomura and William Blair/JMP.
- Shares are lower, but not as much as the Nasdaq (down 3.1%). FQ1 results arrive on Wednesday afternoon.
Dec. 15, 2015, 2:13 PM
- Markets are giving a thumbs-up to news recently-appointed F5 (NASDAQ:FFIV) CEO Manny Rivelo has resigned due to an undisclosed personal conduct issue, and will be replaced (for now at least) by long-time CEO John McAdam. The Nasdaq is up 1.3%.
- "Management disruption increases the potential for F5 to seek a strategic buyer in 2016 concurrent with a search for a new CEO," writes Pac Crest's Brent Bracelin. RBC also thinks F5 could be an acquisition target, and notes the company has $1.2B in cash and no debt.
- By contrast, William Blair's Jason Ader (downgraded in November following F5's analyst day) is worried "the number of recent executive departures is alarming and could be disruptive to the business" at some point in FY16 (ends Sep. '16). "Overall, we continue to view F5 as stuck in a catch-22 situation where shares will be penalized for either the pursuit of growth, which we believe requires greater investment to succeed (thus cutting into margins), or value (which will protect margins but hurt growth)."
- Nomura's Jeff Kvaal sees the CEO change potentially disrupting FQ1 (calendar Q4). But he declares McAdam to be "the best candidate to propel F5 beyond this unexpected, and unfortunate, turn of events." F5 has reiterated its FQ1 guidance (issued on Oct. 28).
Dec. 9, 2015, 9:19 AM
- Believing the company's macro outlook remains shaky and that a pending hardware refresh cycle is unlikely to bring a return to material revenue growth, Nomura's Jeff Kvaal has downgraded F5 (NASDAQ:FFIV) to Reduce, and cut his target by $20 to $90.
- Shares have dropped to $100.20 premarket. William Blair and JMP downgraded F5 last month following its analyst day, with each citing a lack of near-term catalysts. JMP also raised concerns about the impact of public cloud adoption.
- F5 now trades for 14x an FY16 (ends Sep. '16) EPS consensus of $7.04; the FY16 revenue growth consensus is 7%. During the company's FQ4 call (transcript), new CEO Manny Rivelo suggested a product refresh will have a bigger impact on the second half of FY16
Nov. 13, 2015, 10:00 AM
- William Blair and JMP have each downgraded F5 (NASDAQ:FFIV) to Market Perform following yesterday's analyst day (webcast). Shares have made new 52-week lows.
- William Blair's Jason Ader considers further downside limited, but also considers it hard to find a near-term catalyst. "[T]he stock is stuck in a purgatorial state between growth and value, and we believe management is overly optimistic about the business’s true growth prospects amid the status quo - a phenomenon that we believe is contributing to the recent spate of executive departures.”
- Likewise, JMP's Erik Suppiger sees limited catalysts, save for "an upgrade cycle that will be one-time in nature," and isn't expected until the second half of FY16 (ends Sep. '16). He adds the adoption of public cloud platforms such as Amazon Web Services and Microsoft Azure is "serving as a net headwind to F5, as enterprises migrate more workloads to these providers, potentially reducing the total market opportunity for F5.”
- F5 sold off hard last months after providing an FQ4 revenue miss and soft FQ1 guidance. On the earnings call (transcript), the guidance was blamed on seasonality, along with caution related to budget uncertainty stemming from forex and "lingering macro issues." When asked about cloud-related pressure, the company insisted cloud adoption is an opportunity, as F5's ADCs enable app/service portability and enforce consistent security and access policies for hybrid cloud deployments and enterprises using multiple public clouds.
- Today's selloff comes as Cisco falls due to the light FQ2 guidance it provided with an FQ1 beat. Cisco noted enterprise orders were a weak spot.
Oct. 29, 2015, 9:13 AM| Oct. 29, 2015, 9:13 AM
Oct. 6, 2015, 9:16 AM
- Believing consensus estimates are too high and that the company is likely to cut guidance over the next 6 months, Citi's Jim Suva has launched coverage on F5 (NASDAQ:FFIV) with a Sell rating and $105 target.
- Suva notes he's the only analyst with a bearish rating on F5. He has also started Cisco at Buy, and Juniper at Neutral.
- F5 has fallen to $116.22 premarket. Suva's coverage comes as smaller F5 rival Radware tumbles in response to a Q3 warning. F5's FQ4 (calendar Q3) report arrives on Oct. 28.
- Yesterday: F5 partners with FireEye
Oct. 6, 2015, 9:15 AM
Oct. 5, 2015, 11:11 AM
- Citing fears about increased competition, Piper's Andrew Nowinski has downgraded FireEye (NASDAQ:FEYE) to Neutral, and cut his target by $23 to $37.
- Nowinski: "Our downgrade is primarily due to increasing competition, though we are also concerned with conflict within the channel and recent executive turnover." His target translates into a 6.3x 2016E EV/sales ratio.
- Palo Alto Networks, Cisco, and others have rolled out threat-prevention products and services over the last year that take aim at FireEye. The company is still generally seen as a technology leader with regards to solutions protecting networks and endpoints from malware and zero-day threats, and in probing attacks that have already occurred.
- Separately, FireEye has announced it's partnering with F5 (FFIV +1.8%), the top player in the application delivery controller (ADC) market and also a security hardware vendor, to provide integrated solutions.
- The joint solutions combine application delivery and content security functions, including "network segmentation and policy management, protocol conformance, DDoS mitigation, SSL inspection, advanced threat protection, intrusion prevention, threat intelligence, forensics, and analytics." FireEye/F5 also promise to provide better visibility into encrypted traffic, and to leverage the health-monitoring and load-balancing features of F5's BIG-IP platform.
- FireEye announced a security services partnership with HP earlier this year, as well as a threat intelligence-sharing partnership with firewall/security appliance vendor Check Point.
Sep. 22, 2015, 11:57 AM
- "We believe F5 (FFIV -3.1%) is experiencing slowing growth in its core ADC product resulting from factors both cyclical and secular," says analyst Ryan Hutchinson, downgrading to Neutral from Buy. He takes note of the conclusion of the Cisco ACE replacement, and the long-term revenue headwind from virtual appliance sales.
- Then there's recent market share data from Gartner showing the broader ADC market growing 4.7-6.5% per year - F5, says Hutchinson, has become a "share donor," losing 130 bps of revenue share between Q1 and Q2 this year, and 60 bps Y/Y.
Aug. 3, 2015, 9:52 AM
- Buckingham Research has downgraded F5 (NASDAQ:FFIV) to Neutral. The firm had upgraded F5 to Buy on Jan. 22, after shares plunged on account of a revenue miss and soft guidance. F5 had risen 23% since.
- The downgrade comes 12 days after the ADC/security hardware and software vendor jumped following an FQ3 beat and strong FQ4 EPS guidance.
Jul. 23, 2015, 2:56 PM
- Application delivery controller/security hardware vendor F5 (FFIV +6.9%) beat FQ3 estimates on the back of strong software sales, and provided above-consensus FQ4 EPS guidance (revenue was in-line). With growing 100G long-haul optical deployments serving as a tailwind, optical networking hardware vendor Infinera (INFN +9.6%) beat Q2 estimates and provided strong Q3 guidance.
- Also: Optical component vendor Alliance Fiber (AFOP +16%) beat estimates and offered healthy guidance. Strong datacom component demand from cloud service providers was cited.
- A slew of telecom/networking equipment, component, and chip vendors are higher on a day the Nasdaq is down 0.4%. The list includes Infinera rival Ciena (CIEN +1.6%), F5 rival Radware (RDWR +3.3%), and Alliance Fiber peer NeoPhotonics (NPTN +4.7%). Others include Ciena acquisition target Cyan (CYNI +1.8%) and chipmakers Cavium (CAVM +3.6%), PMC-Sierra (PMCS +3%), EZchip (EZCH +2.8%), and InPhi (IPHI +3.7%).
- Broader gains for chip stocks - the Philadelphia Semi Index is up 1.7% after selling off hard yesterday - are likely helping the chipmakers. Cisco, meanwhile, is up 2.2% after striking a deal to sell its share-losing set-top unit to Technicolor.
- During F5's earnings call, new CEO Manny Rivelo stated F5 now leads the virtual (software-based) ADC market, which has sometimes been seen as a major long-term threat to its ADC hardware business, and noted the company saw a 20% Y/Y increase in its deferred revenue balance (driven by services/subscription growth) to $743M. He also disclosed sales chief Dave Feringa is stepping down on Oct. 1; his successor will be named shortly.
- On Infinera's call, CEO Tom Fallon mentioned the company has now invoiced 12 customers for its new Cloud Xpress data center interconnect platform, up from 7 three months ago. For now, long-haul optical still makes up over 90% of revenue - Cloud Xpress growth, the pending launch of a metro aggregation product, and (provided it's approved) the Transmode acquisition should change that. 3 customers accounted for over 10% of Q2 revenue.
Jul. 22, 2015, 4:14 PM
- In addition to beating FQ3 estimates, F5 (NASDAQ:FFIV) is guiding for FQ4 revenue of $500M-$510M and EPS of $1.72-$1.75 vs. a consensus of $504.7M and $1.71.
- Software (virtual ADC/add-on module) sales were a strong point, as were enterprise and U.S. federal demand. Software accounted for over a third of FQ3 product revenue.
- Key numbers: FQ3 product revenue +5% Y/Y to $248.8M; services revenue (driven by past product sales) +15% to $234.8M. GAAP operating expenses +10% to $257.8M. $150M was spent on buybacks. F5 ended FQ3 with $1.35B in cash/investments, and no debt.
- Shares have risen to $125.03 AH.
- FQ3 results, PR
Jun. 29, 2015, 8:13 AM
- Citing valuation's Piper's Troy Jensen has downgraded F5 (NASDAQ:FFIV) to Neutral. His target is $130.
- Shares have fallen to $120.62 premarket. The application delivery controller/security hardware vendor trades for 16.6x an FY16 (ends Sep. '16) EPS consensus of $7.25.
- Citi downgraded F5 on June 1. FQ3 results arrive on July 22.
Apr. 23, 2015, 12:49 PM
- Down AH yesterday after providing soft FQ3 sales guidance (and in-line EPS guidance) to go with an FQ2 beat and naming EVP Manny Rivelo its new CEO, F5 (NASDAQ:FFIV) has reversed course today. With shares having been hammered in January due to a revenue miss and soft guidance, expectations were relatively low.
- The news has triggered both an upgrade to Buy from Needham, and a downgrade to Neutral from MKM. Needham expects stronger 2H15 growth, aided by easier comps and rising telecom capex. MKM is worried about both growth and the CEO change.
- Wedbush sees 3 reasons to remain bullish. "1) Over the past 4-6 [quarters], F5 has demonstrated the capability to deftly manage the shift from hardware- to more software-based services; 2) F5’s revenue stream is increasingly more diversified to recurring and non-recurring revenue streams. 3) A stabilizing FX environment could prove a positive catalyst for revenue growth, while creating a favorable advantage for Opex and EPS."
- JMP asserts F5's ADCs remain "central to next-gen data center architectures," and sees the company's tiered pricing model (i.e. Good, Better, Best) and rising virtual (software-based) ADC sales boosting margins. It also sees further opportunity to benefit from Cisco's 2012 ADC market exit. Cisco ADC partner Citrix just reported soft networking division numbers.
Apr. 22, 2015, 4:52 PM
- Along with its FQ2 results, F5 (NASDAQ:FFIV) has announced Manny Rivelo, the company's EVP of strategic solutions (has been responsible for "strategic development, product management, and global marketing strategy"), is its new CEO, effective July 1. He's also joining the board.
- Rivelo will replace long-time CEO John McAdam, who announced plans to retire last October. McAdam will remain with F5 as chairman. Al Higginson, chairman since 2004, will move over to the role of lead independent director.
- Though F5 beat FQ2 estimates (more on EPS than revenue), it's guiding for FQ3 revenue of $475M-$485M, below a consensus of $489.4M. EPS guidance of $1.57-$1.60 is in-line with a $1.59 consensus. Not surprisingly (given the issues faced by many enterprise tech peers), F5 is blaming a strong dollar and its impact on EMEA/Asia-Pac demand.
- The ADC/security hardware vendor saw "solid sequential and year-over-year growth in sales to U.S. service providers and enterprise customers" in FQ2, aided by a rebound in $1M+ deal activity. However, EMEA/Asia-Pac sales were below expectations. The deferred revenue balance rose a healthy 23% Y/Y to $721M.
- Shares have fallen to $115.90 AH.
- FQ2 results, PR
Mar. 9, 2015, 9:52 AM
- Barclays has downgraded F5 (NASDAQ:FFIV) to Underweight, albeit while keeping its $114 target intact. Gigamon (NYSE:GIMO) has been upgraded to Overweight, with its target hiked by $5 to $26.
- The F5 downgrade follows a January plunge caused by a revenue miss and soft guidance. Wedbush offered a more positive take on the ADC/security hardware vendor last week, praising its diversification efforts, valuation, and ongoing mix shift towards software and software-based services. Software revenue rose 44% Y/Y in calendar Q4 (compares with 14% total revenue growth).
F5 Networks Inc is a developer and provider of software-defined application services designed to ensure that applications delivered over Internet Protocol (IP) networks are available to any user, anywhere, anytime, on any device and on any network.
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