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F5 Inc FFIV Stock Quote

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Morningstar‘s Stock Analysis FFIV

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Is it the right time to buy or sell?

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F5 Increases Product Delivery in Q4, Faces High Costs to Meet Demand; Maintaining $199 FVE

Analyst Note

| Malik Ahmed Khan |

We maintain our $199 fair value estimate for narrow-moat F5 after its fourth-quarter results slightly exceeded our expectations for revenue and adjusted earnings. We remain confident in F5’s plan for growth and margin expansion by expanding its software and application security portfolio. After releasing results, shares traded down over 4%, which we believe is the result of margin contraction. We view this as an overreaction when considering the contraction is predominantly the result of increased component and expedite costs from the broker market. There was also continued demand for its systems products, and despite a significant order backlog, F5 has seen extremely few to no order cancellations. We view shares as undervalued and expect to see F5 work down its order backlog through the first half of its fiscal 2023 while continuing to grow its margin-accretive software business.

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Key Statistics FFIV

Company Profile FFIV

Business Description

F5 is a market leader in the application delivery controller market. The company sells products for security, application performance, and automation. Its three customer verticals are enterprises, service providers, and government entities. Revenue is evenly split between its services business and products business with revenue trending toward products due to software adoption. The Seattle-based firm was incorporated in 1996, has about 6,500 employees, and generates about 55% its revenue within the Americas, 25% in EMEA, and 20% in APAC/Japan.

801 5th Avenue
Seattle, WA, 98104
T +1 206 272-5555
Industry Software - Infrastructure
Most Recent Earnings Sep 30, 2022
Fiscal Year End Sep 30, 2023
Employees 7,089

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