Citi: F5 Networks Shares Fully Valued After Recent Rally


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


The year-to-date rally in F5 Networks, Inc. (NASDAQ:FFIV) has made one analyst at Citigroup wary about further upside.

The Analyst

Analyst Jim Suva downgraded the stock from Buy to Neutral, but raised his price target from $170 to $190, citing an increase in the market multiple from 15 times to 16.7 times.

The Thesis

Following a disappointing 2017, F5 Networks recently guided to continued sequential growth in the upcoming quarters in 2018, Suva said in a note. The analyst noted the consensus is also estimating positive sequential growth.

The growth, according to Suva, is driven by strong software revenues and the Enterprise segment, thanks to deployments in public cloud and security.

The period of the slower growth in the recent past is due to a transition of the customer's replacement/upgrade cycle, the analyst said, citing the F5 Networks bulls. That said, Citi believes the stock price isn't fully reflecting the company's ongoing shift toward services revenue.

"We do not believe estimates are likely to move lower or higher and we see no valuation multiple expansion," the firm said.

Citi's top stocks in the space in the order of preference are:

  • Arista Networks Inc (NYSE:ANET)
  • Cisco Systems, Inc. (NASDAQ:CSCO)
  • Apple Inc. (NASDAQ:AAPL)

The Price Action

F5 Networks shares have added about 38 percent in the year-to-date period. At time of writing, the stock was down 1.5 percent Tuesday to $185.90.

Related Links:

F5 Networks Lacks Fundamental Catalysts; 2 Firms Downgrade The Stock

Take Advantage Of Cisco's Sell-Off, Baird Says


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


ENTER TO WIN $500 IN STOCK OR CRYPTO

Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!

Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsCitigroupJim Suva