F5 Spells Upside: Analyst
Updated with F5 share price and corrected analyst information.
SEATTLE (
) --
F5 Networks
(FFIV) - Get Report
may not be as big a name as competitor
Cisco
(CSCO) - Get Report
, but the smaller Seattle gearmaker could spell upside for investors eager to tap into the IT spending rebound.
F5's stock has risen more than 200% in the last 12 months and is currently trading at about $62. Ryan Hutchinson, an analyst at Lazard Capital Markets, recently rated F5 a buy and raised his price target from $60 to $75.
At least one analyst -- Hutchinson -- believes that Wall Street has low-balled F5, the data center networking specialist. Analysts are expecting 23% and 15% revenue growth for fiscal 2010 and fiscal 2011 respectively, although these numbers should be 26% and 17%, said Marx.
"We are lifting our numbers given strong channel feedback and indications that the company is bucking typical March quarter seasonal weakness," he wrote in a note released on Thursday. "The stock has moved higher following the company's strong fiscal first quarter 2010 earnings report in February, and continues to trade at five-year highs."
F5, which also competes with
Citrix
(CTXS) - Get Report
and
Juniper
(JNPR) - Get Report
, enjoyed strong product sales during its
first-quarter
, pushing revenue up more than 15% compared to the same period last year.
F5's strong position in data center hardware has placed the firm under the microscope, and there has already been talk of
Hewlett-Packard
(HPQ) - Get Report
.
The rumor-mill has cranked up again, according to analyst firm Miller Tabak, citing recent chatter in the blogosphere. While Miller Tabak analyst Alex Henderson acknowledges that H-P needs to compete with Cisco, he said that the tech giant is an "extremely price sensitive buyer" and is unlikely to make a move for F5.
Cisco's decision to move into the server space with the launch of its
last year certainly agitated H-P, its long-time server partner. But with a market cap of $4.93 billion, F5 would not come cheap for H-P, and the firm, which recently spent
, may be unwilling to reopen its coffers.
"This is a persistent speculation that has popped up periodically on F5 for over a decade," wrote Miller Tabak's Henderson in a note. "The persistent unfounded chatter of this event makes it difficult to take too seriously since it pops up every three to six months."
A spokeswoman for F5 said that the company was hardly shocked by the ongoing rumors.
"F5 is a strategic point of control within people's data centers so I can understand why our name may surface in those discussions," she explained, in an email to
TheStreet
. "The management team at F5 is pleased with the achievements the company has made and we intend to continue to be a vibrant part of the technology scene."
H-P has not yet responded to
TheStreet's
request for comment on this article.
F5 shares gained 99 cents, or 1.58%, to reach $63.66 on Thursday, outpacing the modest advance in tech stocks that saw the Nasdaq rise 0.40%.
Analysts surveyed by Thomson Reuters expect F5 to post revenue of $198.53 million and earnings of 54 cents a share when it reports its second-quarter results on April 21.
-- Reported by James Rogers in New York
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