Commentary from research within the Enterprise, Cloud, and Service Provider IT Channel signals weaker than expected demand for F5's Layer 4-7 appliance refresh that is aimed at mid to large enterprises and telcos in the U.S., parts of Western Europe, Japan and elsewhere, Bhagavath commented in his research report. In fact, the appliance refresh opportunity is now expected to see heightened competition from "pure play" providers in addition to "low cost" Open Source alternatives and competition from Hyperscale Cloud providers.
"These headwinds are meaningful detractors for FFIV's FY18+ Growth Story and to stock performance in our view, as expectations around Takeout, Product Refresh, Margin Accretion, etc are likely to deflate," the analyst said.
Heading into fiscal 2018, F5's Appliance revenues are now expected to decelerate which marks a reversal versus prior expectations for a 4-percent growth rate in fiscal 2017 and in the "1 percent range" next year, the analyst added. Meanwhile, the Street is calling for a mid-single digit growth rate, which implies downward revisions to consensus estimates could be forthcoming.
At time of publication, shares of F5 were down 4.32 percent at $118.38.
Related Links:F5 Networks Lacks Fundamental Catalysts; 2 Firms Downgrade The Stock
Channel Checks Suggest NetApp's Cloud Products Gaining 'Mindshare' With Customers
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.