Analysts Cut F5 Price Target Following Lack-Lustre Outlook

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Analysts bumped down their price targets on F5 Inc FFIV following the Q1 beat and Q2 guidance below consensus.

  • RBC Capital analyst Matthew Hedberg maintained Sector Perform on F5 and cut the price target from $220 to $210 (7% upside).
  • The quarter was "solid," with a 19% increase in product revenue and a 47% increase in the software business. However, the management's FY22 revenue growth guidance cut reflects the increasing supply chain challenges and warrants a more "conservative approach."
  • Citi analyst Jim Suva lowered the price target on F5 from $215 to $210 and reiterated a Neutral. 
  • While the company's December results beat expectations, the March quarter outlook will likely disappoint investors with projected sales of 9% and earnings 30% below expectations, Suva notes.
  • The analyst points out that all the disappointment is attributable to supply chain constraints.
  • Credit Suisse analyst Sami Badri lowered the price target on F5 from $278 to $270 (37.5% upside) and maintained an Outperform.
  • While F5 reported, non-GAAP revenues/EPS above his estimates led by strong software growth, Systems performance, and Government business lagged. 
  • Supply chain weakness and the degree of disruption F5 called out did not match up with the analyst's checks, a negative surprise, leading to management revising down their full-year 2022 guidance.
  • Barclays analyst Tim Long maintained Overweight on F5 and slashed the price target from $234 to $232 (18% upside).
  • Jefferies analyst George Notter said his analysis leads him to believe that other vendor peers like Arista Networks Inc ANETCisco Systems Inc CSCOJuniper Networks Inc JNPR, and Ciena Corp CIEN, have "relatively lower" supply chain risk and that he thinks "it's more of an F5 issue" than a "supply chain 'canary' in the coal mine." 
  • Notter cut his FY22, FY23 revenue, and EPS estimates for F5 while keeping a $200 price target and Hold rating on the shares.
  • Price Action: FFIV shares traded lower by 11.19% at $196.39 on the last check Wednesday.
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