F5 Networks Inc.
) have gained momentum from its strong fundamentals and
better-than-expected third quarter fiscal 2014 results released on
Jul 23, 2014. Since the release, the stock price has moved up 8.3%.
F5 Networks' shares touched a new 52-week high of $120.58
yesterday, eventually closing at $120.02. This Zacks Rank #1
(Strong Buy) stock amassed a return of nearly 40.1% over the past
year and a year-to-date return of 35%. Average volume of shares
traded over the last three months stands at approximately 1,305K.
Results were driven by double-digit revenue growth across all its
business segments, and better-than-expected demand for systems and
application services. Revenues came in at $440.3 million, up 18.9%
year over year. Moreover, it surpassed the Zacks Consensus Estimate
of $434.0 million.
Notably, F5 Networks' "Good, Better, Best" (GBB) pricing strategies
(up 49% sequentially) also helped to streamline the company's
product portfolio and drive year-over-year revenue growth.
The company's adjusted earnings came in at $1.07 per share, beating
the Zacks Consensus Estimate of 1.05 per share and surging 23.1%
year over year. Investors remained optimistic about the stock's
performance as F5 Networks delivered a positive earnings surprise
of 1.9% in the last reported quarter. The company has a market cap
of $8.83 billion and a long-term expected earnings growth rate of
The company also provided encouraging fourth-quarter earnings
guidance. For the fourth quarter of fiscal 2014, F5 Networks
expects non-GAAP earnings per share (excluding stock-based
compensation expenses) to be in the range of $1.46 to $1.49, well
above the Zacks Consensus Estimate of $1.22 per share.
The recent price appreciation can also be attributed to F5
Networks' upcoming product launches and growing demand for its
security solutions. The company's product refreshes are expected to
boost revenues, going forward. Moreover, these initiatives are
expected to expand the company's total addressable market (TAM) and
result in client wins.
Further, F5 Networks entered into a partnership with VMware, Inc. (
) to provide cloud-based security services. F5 Networks will
combine its BIG-IP application services with VMware vCloud Hybrid
Service, which provides private cloud-based services to make the
cloud-computing environment more secure, simple, flexible and
F5 Networks has also witnessed positive estimate revisions in the
past 30 days with five upward revisions and no downward revision
for the current quarter. The positive revisions led to a 7% rise in
the Zacks Consensus Estimate to $1.22 per share for the fourth
quarter of fiscal year 2014.
As things stand now, we believe that better execution and focus on
enterprise and service providers will place F5 Networks well in the
application delivery controller market. Nevertheless, a
volatile spending atmosphere and competition from Juniper Networks
) and Cisco Systems, Inc. (
) remain concerns.
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