F5 Networks (FFIV) Guidance is Execution Issue, Not Segment Issue - Analyst

April 5, 2013 10:27 AM EDT
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Price: $142.29 +0.47%

Rating Summary:
    21 Buy, 30 Hold, 2 Sell

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Today's Overall Ratings:
    Up: 11 | Down: 22 | New: 54
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Nomura is maintaining a Neutral rating on F5 Networks (Nasdaq: FFIV), but cutting its price target from $104 down to $85 following preliminary Q213 results issued on Thursday.

The firm commented that, "the miss was largely driven by weaker product revenues, which are expected to come in at $185.1mn vs. our $206.8mn estimate. Much of the shortfall came from a weaker-than-expected Telco vertical, plus a weaker-than-expected US region."

Nomura notes that F5 management blamed the miss on large deals, but that the timing (just a few days following close of the quarter) means not enough was being done on the execution front and competition had little to do with the results. The firm states, "[F5] has fallen short on revenues over the last three quarters, partly due to its product transition. The new products had several Telco specific features, which may have led to pushed out purchasing decisions."

For FY13, Nomura lowers EPS and revenue expectations from $1.56 billion and $5.04 to $1.50 billion and $4.65, respectively. The firm now sees FY14 revs of $1.85 billion and EPS of $5.33, from revs of $1.87 billion and EPS of $6.06 prior.

For an analyst ratings summary and ratings history on F5 Networks click here. For more ratings news on F5 Networks click here.

Shares of F5 Networks closed at $90.42 yesterday.

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