F5 Networks (FFIV) Soars on a Strong FQ3 Beat, Analysts Raise PTs
Shares of F5 Networks (NASDAQ: FFIV) are up 7.5% in pre-open trading Tuesday after the company delivered stronger-than-expected results for its fiscal third quarter.
The Seattle-based business reported earnings per share of $2.76 to easily top the $2.46 expected from analysts. Revenue came in at $652 million that is again higher than the $638 million expected from the Street.
“Our very strong third quarter results demonstrate the powerful alignment of F5’s expanded solution portfolio and our customers’ most important application needs,” said François Locoh-Donou, F5’s President and CEO.
“Robust software growth and resilient demand for systems drove 12% GAAP revenue growth in our third quarter, and 11% revenue growth versus the prior year’s third quarter non-GAAP revenue.”
On the FQ4 guide, Q4/21 midpoint revenue/EPS came in at $670 million and $2.74 to again beat the estimates of $662 million and $2.71.
Needham & Company analyst Alex Henderson raised the price target to $265.00 per share from $255.00 on a “very strong” beat.
“F5 sounded very confident on its 3QF21 earnings call, and its stock appreciated over the course of the call as management sprinkled a series of strongly positive data points across the script and Q&A. Strength in NGINX and Shape, strong utilization rates driving volume renewal upgrades, rich upsell of added functionality particularly on NGINX, and robust Software and Appliance sales into Cloud SPs and SaaS providers drove strong y/y software growth of 34%. Systems Product Sales also posted robust 13% growth, which combined with the Software growth for 21% Product Sales growth. F5 demonstrated it's a Cloud play, refuting a recent bulge-bracket Sell rating. We see the good news continuing,” the analyst commented in a note.
RBC analyst Matthew Hedberg also moved higher on the target price to $215.00 per share (from $200.00) on “improved quarter and guide.” The analyst, however, maintained a Sector Perform rating on the stock.
“Management noted a healthy IT spending environment, supported by strong product and software growth. Guidance forQ4/21 goes higherfor both revenue and EPS as management remains bullish on their Horizon 2 targets, which implies an acceleration in software growth. Maintain our SP rating and increase our PT to $215 as we find shares fairly valued; questions from here will focus on the software trajectory and the potential for updated Horizon 2 targets on the Q4/21 call,” Hedberg said.