Investors in F5 Networks, Inc. (NASDAQ:FFIV) had a good week, as its shares rose 6.9% to close at US$136 following the release of its annual results. Revenues of US$2.4b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$5.01, missing estimates by 4.4%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 16 analysts covering F5 Networks are now predicting revenues of US$2.49b in 2021. If met, this would reflect a modest 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 12% to US$5.66. In the lead-up to this report, the analysts had been modelling revenues of US$2.45b and earnings per share (EPS) of US$6.12 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$162, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic F5 Networks analyst has a price target of US$190 per share, while the most pessimistic values it at US$124. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting F5 Networks' growth to accelerate, with the forecast 5.9% growth ranking favourably alongside historical growth of 3.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.2% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect F5 Networks to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$162, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for F5 Networks going out to 2023, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with F5 Networks , and understanding it should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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