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F5 to Buy Volterra, Lifts Estimate of 1st-Quarter Earnings

F5 will acquire software startup Volterra for $440 million in cash and $60 million in other consideration. And it lifted its estimate of first-quarter earnings.
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F5 Networks  (FFIV) - Get F5 Inc. Report shares rose after the software application security and delivery company said it was buying software startup Volterra and lifted its estimate of first-quarter earnings.

The moves prompted some analysts to laud the Seattle company.

F5 will acquire Volterra for $440 million in cash and $60 million in other consideration. 

“With the addition of Volterra’s technology platform, F5 is creating an edge platform built for enterprises and service providers that will be security-first and app-driven with unlimited scale,” the companies said in a statement.

F5 stock recently traded at $190.03, up 5.5%. It has soared 51% in the past three months.

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For the fiscal 2021 first quarter ended Dec. 31, the company estimated non-GAAP earnings per share would exceed the top end of its prior guidance of $2.26 to $2.38.

F5 estimated GAAP and non-GAAP revenue of $623 million and $626 million respectively, up about 10% from a year earlier. 

Cowen raised its price target for F5 to $223 from $199, keeping an outperform rating. The earnings estimate indicates an “improving near- and longer-term outlook,” Cowen analysts wrote, according to Bloomberg. And that strengthens their “positive view of FFIV’s market opportunity and positioning.”

William Blair has a market-perform rating and spoke well of the acquisition. It sees “virtually zero product overlap with F5’s current portfolio and the opportunity for F5 to leverage Volterra’s expertise,” Bloomberg reports. The earnings news also is positive, William Blair analysts said.

KeyBanc Capital Markets said the Volterra purchase “accelerates F5’s edge application capabilities,” Bloomberg reports. The earnings numbers also were impressive, KeyBanc analysts said.