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F5 Networks Inc FFIV

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Morningstar’s Analysis

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F5 Networks’ Q3 Provides Confidence in Its Position as Key Cog of Application Needs; $200 FVE

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are increasing our fair value estimate of narrow-moat F5 Networks to $200 from $185 after its strong third quarter results and our belief that the company’s application solutions will remain needed in the long-term. Shares are fairly valued, in our view. Year-over-year revenue growth of 12% in the quarter was slightly higher than we expected while adjusted earnings of $2.76 were much higher due to lower taxes. While F5’s ability to enable modern application development and delivery are critical to cloud-native solutions, the importance of bridging the gap and enabling traditional and modern applications holistically, in any environment, provides F5 with a sustainable market presence, in our view. Additionally, we believe a heightened threat environment and the demand to protect applications sets F5 up nicely to keep customers locked into its ecosystem.

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Company Profile

Business Description

F5 Networks is a market leader in the application delivery controller market. The company sells products for networking traffic, security, and policy management. Its products ensure applications are safely routed in efficient manners within on-premises data centers and across cloud environments. More than half of its revenue is based on providing services, and its three customer verticals are enterprises, service providers, and government entities. The Seattle-based firm was incorporated in 1996 and generates sales globally.

801 5th Avenue
Seattle, WA, 98104
T +1 206 272-5555
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type Slow Growth
Employees 6,109