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Seattle-based F5, Inc. (FFIV) provides multi-cloud application security and delivery solutions. Its application, delivery, and networking products improve the performance, availability, and security of applications running on networks that use the Internet Protocol. With a market cap of $12.8 billion, F5’s operations span the United States, Indo-Pacific, Europe, the Middle East, and internationally. The tech major is expected to announce its Q4 earnings on Tuesday, Oct. 22.
Ahead of the event, analysts expect F5 to report a profit of $2.72 per share, down 1.5% from $2.76 per share reported in the year-ago quarter. However, it has surpassed Wall Street’s EPS estimates in each of the past four quarters. Its EPS for the last reported quarter grew by 7.3% year-over-year to $2.64 and surpassed the consensus estimates by 18.4%.
For fiscal 2024, analysts expect F5 to report an EPS of $10.18, up 20.2% from $8.47 in fiscal 2023. In fiscal 2025, its EPS is expected to grow 6.9% year-over-year to $10.88.
FFIV has gained 22.7% on a YTD basis, outpacing the S&P 500 Index’s ($SPX) 19.7% gains and the Technology Select Sector SPDR Fund’s (XLK) 15.3% returns during the same time frame.
Shares of F5 soared 13% in the subsequent trading session after the release of its better-than-expected Q3 earnings on Jul. 29. Although the company saw a slight annual decline in topline, its total revenue of $695.5 million topped Wall Street’s expectations, fueled by software and global services offerings’ growth.
Additionally, due to a reduction in restructuring charges, its operating margin expanded by 8.7% year-over-year to 23.4%, leading to a 57.5% growth in operating income, reaching $163.1 million.
Despite the improvement in profitability and growth in services revenue, the company’s product revenues have remained a concern. F5’s aggregated revenues from products for the past three quarters have declined by 9.4% year-over-year to $914.5 million. Moreover, its full-year total revenues are expected to remain flat at $2.8 billion, the same as the previous fiscal.
The consensus opinion on F5 stock is neutral, with an overall “Hold” rating. Out of the 13 analysts covering the stock, one suggests a “Moderate Buy,” 11 recommend “Hold,” and one advises a “Moderate Sell” rating.
While F5 is trading above its mean price target of $203.70, the Street-high target of $235 suggests a potential upside of 7% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
