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F5 Networks Hits 52-Week High on Cloud & Security Strength

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F5 Networks Hits 52-Week High on Cloud & Security Strength

Strong performance of its software offerings, especially multi-cloud architectures solutions drive F5 Networks' (FFIV) shares.

Shares of F5 Networks, Inc. FFIV rallied to a new 52-week high of $188.62, eventually closing a tad lower at $187.64 on Aug 24.

Notably, the stock has been witnessing an upside, appreciating 43% year to date compared with the industry’s rally of 24.2%.

 



The company is benefiting from the deployments in public and private cloud driven by the surge in demand for security in the multi-cloud environment.  This is evident from its recently reported third-quarter fiscal 2018 results, wherein both the top line and bottom line surpassed the Zacks Consensus Estimate and recorded year-over-year improvement.  We note that the company has beaten the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 6.61%.

F5 currently has a Zacks Rank #2 (Buy). It has a market cap of $11.412 billion and a long-term expected earnings growth rate of 9.19%.

What’s Backing the Rally?

F5 is riding high on strong momentum in its software offerings. Its multi-cloud architectures solutions and services business are the key growth drivers. Notably, the recently launched BIG-IP Cloud Edition is expected to be a catalyst for software growth.

Per MarketsandMarkets, the cloud security market size is expected to be worth $12.73 billion by 2022, witnessing a CAGR of 25.5% between 2017 and 2022. In order to establish itself as a leading provider of multi-cloud application services, F5 announced that it will increase investments in cloud and security, the fastest-growing areas of the company. Given the bullish prospects of this market, F5’s focus on it makes investors optimistic about the company.

Application Protection continues to be a driver of security solutions with strong momentum in the company’s Web Application Firewall offerings.

A recent win during a demonstration at a European web hosting company, driven by its Advanced Web Application Firewall is a testimony to the fact.F5’s Advanced WAF was able to successfully protect the customer’s website portals and safeguard their brand reputation from the sophisticated layer 7 DDoS attacks. This strengthened customers’ confidence in the company’s services.

Moreover, the company has been taking robust steps and making promising announcements, which make us optimistic about its prospects. For instance, it recently announced that it is set to launch F5-as-a-Service, which is a “complete self-serve model that would be hosted in a public cloud and would address all of the DevOps buyers that want to go to a pure public cloud buying motion” in 2019.

Other Stocks to Consider

Few other top-ranked stocks in the broader Computer and Technology sector are Virtusa Corporation VRTU, Qualys, Inc. QLYS and Fortinet, Inc. FTNT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Virtusa, Qualys and Fortinet is projected to be 20%, 8% and 16.8%, respectively.

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