Analysts Trim Price Target On F5, Though Maintain Upbeat Stance Amid Tough Macros

F5, Inc's FFIV Q3 results impressed analysts amid challenging macros.

RBC Capital analyst Matthew Hedberg maintained a Sector Perform and cut the price target from $200 to $175. He saw F5 delivered a good quarter and guide relative to expectations. 

Management noted good demand in Q3 and a strong pipeline for Q4 driven by the expansion of its product portfolio but remains conscious of the macros, both on the supply side and demand side, he noted. Hedberg was impressed by the business's resiliency but remained cautious in the near term due to uncertain macros.

Credit Suisse analyst Sami Badri maintained F5 with a Neutral and raised the PT from $167 to $171. The strong beats were mainly due to better-than-expected growth in Systems. 

Systems declined by 18% due to continued shortages of semiconductors. F4Q22 guidance was below/in-line CS/Street expectations, respectively. 

Badri noted that investor sentiment was tilted negative into results with further supply fears for systems, partially explaining that the after-market reaction in trading activity is higher. 

KeyBanc analyst Thomas Blakey reiterated Overweight and $212 PT after F5 beat and guidance raise.

Street expectations for Networking names ratcheted down over the last several weeks, but demand has not for Software and Security, Needham analyst Alex Henderson noted. 

He saw F5 answer several recent analyst-issued Sell ratings with a 3QF22 Beat and Raise on 38% Software growth with "strong demand for Security and Software across all verticals and Geos." F5 punctuated its conviction by building a backlog and increasing its $272 buyback availability by authorizing an additional $1 billion. 

Despite macro concerns, the upside to the results and guidance led Henderson to increase his revenue and EPS estimates for FY22 and FY23 even as he trimmed his FY23 Revenue growth rate estimate to anticipate weaker economic conditions. 

F5 appears to have enough backlog/pipeline to power through a modest recession and still produce growth in FY23, he believes. Henderson reiterated a Buy and a PT of $303.

Price Action: FFIV shares traded higher by 2.42% at $158.15 on the last check Tuesday.

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