F5 (FFIV) stock soars on strong earnings forecast, analysts positive


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Shares of F5 Networks (NASDAQ:FFIV) rose nearly 8% premarket on Tuesday after the communications equipment company announced an upbeat outlook for the fourth quarter.

The company reported EPS of $2.57 on revenue of $674.5 million to beat EPS consensus of $2.23 on revenue of $668.1 million.

For this quarter, F5 sees adjusted EPS between $2.45 and $2.57, well ahead of the $2.29 estimate. Revenue is between $680 million and $700 million, with the midpoint slightly below the consensus of $691.1 million.

“We saw strong demand in the third quarter and we have a strong pipeline in the fourth quarter,” the company said in a statement.

F5 also announced an additional $1 billion for its common stock repurchase program, on top of the remaining $272 million in the existing program.

Raymond James analyst Simon Leopold believes recession fears are unwarranted for F5.

“Are recession fears justified for F5? Given the resilience of large enterprises, so far the answer is “no”. Still, management expressed a cautious tone and cited macro-economy risk (eg, inflation, currency), noting that this would slow hiring. Supply shortages remained largely unchanged and hardware revenue is expected to bottom out in the December quarter,” Leopold told customers in a note.

Bank of America analyst Tal Liani reiterated a neutral rating despite “better than expected third quarter results.”

“4Q is normally a strong quarter for software, but management has highlighted higher risks to hitting the high end of its FY22 software growth range and we calculate that at the low and midpoints of the yearly guidance range, 4Q software could decelerate to 20% and 28% year over year, respectively.This also calls into question Street’s ability to meet FY23 expectations of around 32%, and with a high mark of $700 million in annual software revenue, we are modeling 23% and 20% growth for fiscal year 23/24,” Liani wrote in a research note.

By Senad Karaahmetovic


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