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F5's Stock Looks More Attractive After a Strategic Acquisition - Tech Check

Eric Jhonsa

Investors apparently weren't pleased that F5 is suspending its stock buyback program because of the NGINX deal, and that it's also now forecasting -- due to the buyback suspension and the investments F5 plans to make in NGINX -- low single-digit annual EPS growth in fiscal 2019 and fiscal 2020. Arguably, F5 should have rallied in response to the deal, which takes out a competitive threat, bolsters the company's cloud position and could meaningfully boost revenue growth in a couple years' time. F5 has long been the top supplier of application delivery controllers (ADCs) -- they're used within data centers to do things such as balance loads between servers running the same software, set network traffic policies and accelerate the performance of certain types of traffic.