F5 Networks shares fall, analysts say company losing market share
Reuters - Shares of network gear maker F5 Networks Inc fell more than 20 percent after it estimated second-quarter results way below analysts' expectations, prompting 11 brokerages to cut their price targets on the company's stock.
While F5 said its results reflected weak market conditions, analysts said the company was losing market share to rivals such as Citrix Systems Inc and Radware Ltd.
William Blair analyst Jason Ader said the application delivery networking market has become somewhat saturated, with less low-hanging fruits remaining, and competitive pressure has begun to have a material impact. He cut his rating on the stock to "market perform."
Mizuho Securities analyst Joanna Makris said price aggression was on the rise. "You are seeing price points come down in the ADC - application delivery controllers - space ... for several quarters now." F5's expansion into other areas is taking time to materialize, she said.
RBC Capital Markets analyst Mark Sue said he did not view F5's difficulty in closing telecom deals as a broad industry trend. However, Mizuho's Makris said Radware's poor first-quarter estimates indicated there was an industrywide weakness.
The Israel-based network equipment maker estimated first-quarter results below analysts' expectations on weak performance in EMEA and China.
F5 on Thursday estimated adjusted earnings of $1.06 to $1.07 per share for the quarter ended March 31. Analysts were expecting adjusted earnings of $1.23 per share, according to Thomson Reuters I/B/E/S.
F5 shares fell to a year-and-a-half low of $71.95 on the Nasdaq early on Friday morning. They were later trading at $72.52.
Shares of Cavium Inc, Citrix, Cisco Systems Inc, Juniper Networks Inc, Radware, Fortinet Inc and Aruba Networks Inc were also down.
Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das