Deutsche Bank Downgrades F5 Networks, But Sees Little Risk For Juniper, Akamai And Others

• F5 Networks, Inc. FFIV have declined 26.27 percent over the past one year, dropping close to the 52 week low on January 7, at $91.82.
• Deutsche Bank’s Vijay Bhagavath has downgraded the rating on the company from Buy to Hold, while lowering the price target from $140 to $100.
• The downgrade is based on the longer than anticipated timeline for the company to target growth areas in the Security segment.

F5 Networks

Analyst Vijay Bhagavath stated, “Service Provider and Datacenter IT spending exposed names, and names levered to secular themes are our Top Ideas for this year.”

Bhagavat mentioned that F5 Networks’ valuation appeared reasonable at present, although the company is likely to take longer than expected to expand into “growth areas” in the Security market, such as Next Gen IPS, Next Gen Security Analytics, Advanced Malware Defense, etc.

Bhagavat believes that DDOS, Telcos and Software ADCs were expected to see single digit growth in FY16.

Infinera Corp.

For Infinera Corp. INFN, Bhagavat maintained a Buy rating, while seeing little risk to the 4Q15 consensus expectations, although 1Q16 was likely to be marginally below seasonal, driven by the timing of 100G Metro Optical projects at the major carriers.

According to the Deutsche Bank report, “INFN is best positioned in our view to benefit from 100G Datacenter and Metro Optical rollouts at US Cable, Telcos, and Web 2.0 in FY16/17.”

Juniper Networks

For Juniper Networks, Inc. JNPR, Bhagavat maintained a Buy rating, while expecting an “inline to slight positive earnings report,” with Security revenues for 1Q16 being potentially affected by the ordering system upgrade in January.

“Vulnerability issues in the legacy ScreenOS products are not likely to be a detractor to Next Gen Security platform sales. JNPR is our Top Idea to play an improving Service Provider spending this year,” the report elaborated.

Akamai Technologies

Bhagavat maintained a Buy rating on Akamai Technologies, Inc. AKAM, while mentioning that a “bounce back” was expected post earnings.

“AKAM is solidly positioned to benefit from TV Broadcasters going Over the Top and from Security and Internet Traffic catalysts,” the analyst said.

Arista Networks

Bhagavat also maintained a Buy rating on Arista Networks Inc ANET, saying that Deutsche Bank’s research pointed towards an “inline to slight positive” results for 4Q15.

However, the 1Q16 guidance might be modestly impacted by the timing of the 100G Tomahawk switch qualification, which could lead to a decline in revenues for the quarter versus 4Q15.

Corning Incorporated

The Deutsche Bank analyst maintained a Buy rating on Corning Incorporated GLW as well, mentioning that the company was a “solid capital return story.”

“While we call for moderating Displays pricing trends over the next few Quarters, we caution near-term headwinds in TV and Mobile Glass demand,” Bhagavat added.