Shares of F5 Networks Inc. FFIV plunged to a new 52-week low of $98.85 on Dec 10 and eventually closed at $99.06, representing a year-to-date decline of 24.1%. Average volume of shares traded over the last three months was more than 1,229k.
Why the Plunge?
F5 Networks’ recent share price drop can be attributed to its not-so-encouraging fourth-quarter fiscal 2015 results. While the top line missed the Zacks Consensus Estimate, the bottom line matched the same. The company’s share price plummeted nearly 18% following its fourth quarter results.
The company also provided a tepid revenue outlook for the forthcoming quarter. For the first quarter of fiscal 2016, F5 Networks expects revenues in the range of $480 million to $490 million (mid-point $485 million). The Zacks Consensus Estimate is pegged at $486 million.
Additionally, estimate revisions have not been favorable. Over the past 60 days, the company witnessed negative estimate revisions for both the current quarter and fiscal 2016. The Zacks Consensus Estimate consequently moved down 9.9% to $1.27 per share and 7.3% to $5.56 per share for the current quarter and fiscal 2016, respectively.
Going forward, the volatile spending atmosphere and competition from Juniper Networks Inc. JNPR remain concerns.
However, it is worth mentioning that the company’s GBB pricing strategy and its BIG-IQ platform remain tailwinds. We believe that the company’s product refreshes will boost revenues, going forward. Moreover, these initiatives are expected to expand the company’s total addressable market and result in client wins.
Stocks to Consider
Some better-ranked stocks in the same space are VASCO Data Security International Inc. VDSI and Cadence Design Systems Inc. CDNS, both sporting a Zacks Rank #1 (Strong Buy).
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