) -- You have to wonder how positive the analyst commentary on

Riverbed Technology


would be if the company hadn't

fallen short

on the top line in second quarter.

"We strongly believe there is nothing fundamentally wrong with Riverbed's products, end markets, or growth potential," wrote Miller Tabak in a research note on Wednesday while keeping its buy rating and 12-month price target on the stock. "We strongly believe the market has substantial growth in front of it and do not see this temporary pause in the upside to revenue growth and beat and raise trajectory to be indicative of anything longer term."

A pack of firms rushed to Riverbed's defense after the networking equipment company posted an in-line profit for its fiscal second quarter and fell short of revenue expectations becaduse of softness in its EMEA (Europe, Middle East and Africa) business.

The stock was down 23% to $31.91 in afternoon action on volume of 22.3 million, more than five times the issue's trailing three-month daily average of 4.4 million, and Miller Tabak was "strong recommending" buying shares on the weakness.

"Riverbed is still best in breed in a high growth end market and is growing by offering customers very rapid pay back on product sales," the firm gushed. "In fact, Riverbed offers the tightest product payback of any company in our coverage."

Sterne Agee was on the same page, saying the weakness abroad doesn't appear to be "systemic" and that it considers Riverbed's competitive position to be intact. It lowered its price target to $38 but kept a buy rating.

"With volatile names such as Riverbed, entry points are critical and we view the pullback as a buying opportunity," the firm said, adding later: "The key question is can Riverbed return to a solid beat-and-raise story after two tough quarters. Looking at U.S. results, we believe the answer is yes, especially with assumptions of a flat EMEA in 3Q."

The health of Riverbed's U.S. business, which posted a year-over-year sales increase of more than 50% for the quarter, and the pair of acquisitions the company also announced on Tuesday that add to its cloud computing capabilities were the main sources of optimism for Sterne Agee, which is choosing to accept the explanation of Riverbed's management for the revenue miss.

"Clearly, visibility into EMEA was the issue and will take time formanagement to build back credibility on this issue," the firm said. "Yet, speaking with management, they believe at this time it to be an issue that appears somewhat isolated to Germany and not UK and France."

Even the fact that this is the second quarter in a row where the company's EMEA business disappointed wasn't enough to spook Riverbed's many bulls. Of the 35 analysts covering the stock, 21 are at either strong buy (9) or buy (12) with the remainder (14) at hold, mostly because of valuation concerns as the shares have appreciated more than 150% in the past year.

ThinkEquity, which reiterated a buy rating and $40 price target on Riverbed, was a bit more measured than most in its commentary but still says the stock should be bought on this weakness.

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The firm says the pullback "more-than-adequately bakes in the EU-related bad news into the stock and ignores RVBD's still-strong operating model and its superior competitive position in a secular growth market, which we believe could return RVBD to its beat-raise ways once the EU begins to normalize."

One voice that was mildly negative was BMO Capital Markets, which has a market perform rating (the equivalent of a hold) on the stock. The firm said the strength in the company's U.S. business is not enough to compensate for the missteps in Europe.

"We view the miss as mostly company specific given the sales issues in Europe," the firm said. "Management attributed the weakness in EMEA to the macro environmentand poor execution, and we believe there is still risk to the region. With two quarters in a row of little or no upside, we believe it will be more difficult for RVBD's multiple to expand."

The stock's forward price-to-earnings multiple has come down to around 27X the consensus fiscal 2012 estimate, which is still a bit richer than 25.5X for competitor

F5 Networks

(FFIV) - Get F5 Networks, Inc. Report

, which reports after Wednesday's closing bell. F5 shares are losing 5.3% to $112.40 in recent trades, and with the stock up more than 50% in the past year, it's similarly priced to perfection.

Wall Street is looking for earnings of 91 cents a share from F5 in its fiscal third quarter ended in June on revenue of $290.7 million.

BMO Capital believes Riverbed's P-E multiple should pull back to around where F5's is, and has a $34 price target on the shares.

"Expectations were high for RVBD heading into the quarter,and a revenue shortfall combined with a premium valuation does not bode well forthe stock," the firm wrote. "We believe concerns on slowing growth are legitimate and expect the stock to trade at a similar multiple to F5, which we view as a good comp."


Written by Michael Baron in New York.

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Michael Baron


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