Shares of F5 Networks Inc. (FFIV) hit a new 52-week high of $112.59 on Feb 11, eventually closing at $112.26. The closing share price represents a one-year return of 8.4% and a year-to-date return of 26.3%. Average volume of shares traded over the last 10 days (2,081K) increased from the average volume of shares traded over the last three months (1,923K).
This Zacks Rank #3 (Hold) company has a market cap of $8.50 billion with long-term earnings growth expectations of 16.5%.
Some of the current optimism surrounding the shares is related to F5 Networks’ upcoming product launches and growing demand for its security solutions. The company’s product refreshes are expected to boost revenues, going forward. Moreover, these initiatives are expected to expand the company’s total addressable market (TAM) and result in client wins.
On Jan 22, F5 Networks reported mixed first-quarter 2014 results. The company’s top line increased year over year and beat the Zacks Consensus Estimate whereas the bottom line fell short of the consensus. Improvement in revenues was due to broad-based strength across end markets and geographical regions. Its cash, cash equivalents and short-term investments stood at $578.2 million compared with $542.1 million in the previous quarter.
The company also provided encouraging second-quarter guidance. For the second quarter of fiscal 2014, F5 Networks expects revenues in the range of $408.0 million to $418.0 million. The Zacks Consensus Estimate of $413.0 million is in the mid-point of the range. The company expects non-GAAP earnings per share to be in the range of $1.23 to $1.26, well above the Zacks Consensus Estimate of 94 cents.
Additionally, F5 Networks also mentioned that it will continue investing in technology and headcount to keep pace with the changing market trends. Better execution and focus on enterprise and service providers have placed F5 Networks well in the application delivery controller market. The company is also keen on expanding its cloud exposure. Nevertheless, the volatile spending atmosphere and competition from Cisco Systems (CSCO), Juniper Networks (JNPR) and Brocade (BRCD) remain concerns.
Over the last 30 days, earnings estimates for F5 Networks did not show any upward or downward movement for the current quarter. The Zacks Consensus Estimate for the second quarter of fiscal year 2014 is pegged at 94 cents per share. The estimate for 2014 increased 12 cents over the same time frame to $4.11 per share due to positive estimate revisions.
Stocks That Warrant a Look
Although, F5 Networks has a Zacks Rank #3, its competitors Juniper Networks and Brocade Communications, both carry a Zacks Rank #2 (Buy).