Bernstein Downgrades F5: 'Buy On Marked Weakness Only'
Bernstein’s Pierre Ferragu believes concerns regarding “cloud cannibalization” have subsided in recent quarters, with F5 Networks, Inc. (NASDAQ: FFIV) returning to product growth with 9 percent sequential change as compared to typical seasonality of 5 percent reported for the previous quarter.
Ferragu downgraded the rating on the company to Market Perform, with a price target of $140.
The analyst mentioned that F5 Networks had issued robust guidance for 2017, expected sequential revenue growth for each quarter and a solid H2.
“The cloud secular bear case against which we have been fighting the last couple of years was likely proven wrong and the recent weakness in product growth is now more widely accepted,” Ferragu stated.
However, underlying secular growth in F5 Networks’ primary market, datacenter, has been slowing over the recent years, and the company’s revenue growth is maturing, with 5–7 percent growth expected in the coming cycle.
“From this perspective, we are concerned that the recent stock price leaves limited room for upside, even if the company is in a decent position to achieve or beat expectations for 2017,” the analyst explained.
At last check, F5 Networks was down 1.65 percent at $140.46.
Latest Ratings for FFIV
|Nov 2016||Bernstein||Downgrades||Outperform||Market Perform|
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