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Apps & Software

F5 Losing Its Outside Support (FFIV)

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By Jon C. Ogg Updated Published
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F5 Networks is losing more of those old buyout hopes.  We noted at VSInvestor.com on October 4 that buyout rumors were driving the stock, but the problem is that it was approached more than a year ago when shares were far lower.  The valuations are excessive and shares were just at $110 and higher just earlier this week.  Now we have shares down 6% more this morning at $93.00 and the market cap is still right at $7.5 billion after a $19 point drop.  Analysts are using the latest gains to exit the stock.

F5 Networks had its ratings cut to Sell from Neutral at Goldman Sachs today . Earlier this week, F5 tumbled after its rating was cut to “Neutral” from “Buy” at Gleacher & Company and it has a price target of $115.00 per share.  The 52-week low is $38.68 and the high is $112.05.  Without an adjustment from ratings, earnings estimates are $2.44 EPS for FY SEPT-2010 and revenue estimates are $874.44 million; next year estimates are $3.07 EPS and $1.1 billion.  That gives a forward multiple of nearly 30-times earnings and almost 7-times revenues.

What F5 offers around the cloud play is an integrated Internet traffic management solution to improve the availability and performance of mission-critical web-based servers and applications; its software solutions manage, control and optimize Internet traffic and content.

If you look at the StockCharts.com chart, this represents a key area.  The 50-day moving average is $94.37, and if that fails and any more exodus comes then the 200-day moving average is all the way down at $71.81.

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Unless something unknown is brewing, F5 stock still appears to have more risk than reward.

JON C.OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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