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F5 +9.1% as analysts measure software-driven quarterly beat

Oct. 27, 2020 3:51 PM ETF5, Inc. (FFIV) StockFFIVBy: Jason Aycock, SA News Editor
  • F5 Networks (NASDAQ:FFIV) is up 9.1% and tagging near-three-month highs today after its fiscal Q4 earnings, where heavy growth in its Software business led to a beat on top and bottom lines.
  • Analysts were generally positive though they expressed some concerns about competition. Needham is Bullish, maintaining a Buy rating and a $180 price target (implying 32% upside); it notes revenue is accelerating "as the mix shifts toward rapidly growing Software from declining Appliances."
  • And Cowen is raising its target to $172 from $168 and maintaining its Outperform rating. The Nginx/Shape acquisitions improved F5's strategic relevance, it says, adding there may be more acquisitions to come. Productivity is up as well, Cowen notes, pointing to operating profit per employee rising sequentially for the first time in seven quarters.
  • Raymond James has a more cautious Market Perform rating, staying "concerned about concerned about secular headwinds from competition from the public cloud."
  • And RBC has a Sector Perform rating. Software growth was offset by an 8% decline in Systems revenue, it notes, and given management guidance for software, RBC thinks organic growth in the segment could be about 13.5%, accelerating quarter-over-quarter.
  • The firm has a $154 target.

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