F5 Networks (FFIV) PT Lowered to $156 at JPMorgan as Software Revenue Misses

JPMorgan analyst Samik Chatterjee lowered the price target on F5 Networks (NASDAQ: FFIV) to $156.00 (from $158.00) after reporting results that were largely in line with revenue but Software revenue growth hit a sequential wall growing only +48% y/y in F1Q20 down from +91% y/y in F4Q19. The decline was due to a sales reorganization and lumpiness of contract wins while Services growth came in above expectations.

The analyst maintained the Neutral rating, stating "In addition to the lower earnings outlook for F2Q20 and FY20 on dilution from Shape, our FY21E earnings outlook is lower as well led by higher pace of expenses relative to prior expectations. Following the earnings announcement, we are modestly raising our revenue forecasts for FY20/FY21; however, our updated EPS forecast is now for $9.60 in FY20 (vs. $9.75 prior) and $10.75 in FY21 (vs. $10.90 prior) on higher than expected operating expenses associated with the acquisition of Shape than initially forecasted".

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