Auriga Downgrades F5 Networks (FFIV) to Hold; Valuation Call

November 20, 2009 7:36 AM EST

Auriga downgrades F5 Networks (Nasdaq: FFIV) from Buy to Hold. Price target $48.

Auriga analyst says, "With the shares of F5 Networks (FFIV) up 17% after the company’s stellar FQ4:09 report on October 21 and its upbeat analyst day, we are lowering our rating to Hold and recommend that investors move to the sidelines, as we see shares fairly valued. Our $48 price target is unchanged. We remain constructive that F5’s commanding lead in application delivery controllers (ADCs) is likely to grow, given the velocity of innovation remaining in the market and the company’s ability to increase performance and functionality relative to the competition. In the intermediate and long term, revenue upside will likely be driven by advances in adjacent technologies, such as virtualization and cloud computing. Near term, we believe that enterprise spending is rebounding after almost 18 months of constrained budgets. However, with the stock trading relatively in-line with its historical five-year median forward 12-month P/E at peak operating margins, we consider the shares fairly priced. Our estimates and price target are unchanged, but given our concerns over increasing R&D intensity and the corresponding near- and intermediate-term headwinds on margins, we are downgrading the shares to Hold."

To see all the upgrades/downgrades on shares of FFIV, visit our Analyst Ratings page.

F5 Networks, Inc. engages in marketing, selling, and servicing products that optimize the delivery of network-based applications, and availability of servers, data storage devices, and other network resources.

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