Shares of F5 Networks Inc. ( FFIV ) 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 16.5%.
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. ( VMW ) 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 efficient.
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 ( JNPR ) and Cisco Systems, Inc. ( CSCO ) remain concerns.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
