F5 Networks (FFIV) Transaction Makes a Buyback Less Likely, Goldman Sachs Reiterates Sell

Goldman Sachs analyst Rod Hall reiterated a Sell rating on F5 Networks (NASDAQ: FFIV) after the company announced the acquisition of privately held Shape Security for $1bn including $400m in new debt issuance. Shape provides app level security to detect and thwart fraudulent users by detecting them using AI and ML based techniques.

The analyst maintained the $117.00 price target stating "While we do not take a view on the likelihood of the deal closing, we calculate that F5 will be left with net cash on the balance sheet of ~$600m if the deal closes at the end of the March 2020 quarter. In our opinion, this makes the potential for a buyback or other cash return to shareholders more remote. F5 also commented that their priority is now paying down debt which supports this view in our opinion. We remain cautious on F5 as virtualized ADC competition looks set to intensify with VMWare’s acquisition of Avi Networks while both enterprise and carrier spending both remain challenged".

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 $143.69 yesterday.

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