F5 Networks remain bullish on upbeat Q4 view

Application Delivery Network (ADN) technology provider F5 Networks, Inc. (NASDAQ: FFIV) saw its shares record a new 12-month high of $127.13, following the release of fiscal 2016 third-quarter results that surpassed the analysts’ expectations. However, the stock, which closed at $118.55 on Friday, has lost about 7.5% so far. Considering the impressive fourth-quarter outlook, new products launched, and the accreditation received, we predict the share price to remain bullish in the current quarter.

The Seattle, Washington-based company reported an increase in the third-quarter revenue to $496.52 million, from $483.59 million in the similar quarter last year. The Q3 2016 revenue was higher than the Street estimates of $495.3 million.

For the third-quarter, F5 Networks, Inc. recorded a net income of $91.79 million, compared to $93.17 million in the third-quarter of 2015. On a per share basis, the Q3 2016 earnings of $1.37 were higher than $1.29 per share posted in Q3 2015.

F5 Networks, Inc.

Excluding the stock based compensation expense, amortization of intangible assets, and litigation charges, among others, the third-quarter non-GAAP earnings of $121.70 million or $1.81 per share topped the Wall Street estimates of $1.79 per share. During the third-quarter of fiscal 2015, the company reported non-GAAP earnings of $120.19 million or $1.67 per share.

For the fourth-quarter, F5 Networks anticipate revenue of between $515 million and $525 million. The company expects non-GAAP earnings in the range of $1.92 to $1.95 per share. The analysts surveyed by Thomson Reuters anticipate earnings of $1.92 per share on revenue of $516.9 million. During Q3 2016, the net operating cash flow increased to $507.47 million, from $501.20 million in the similar period of 2015.

During the third-quarter, the debt free company expanded its security portfolio focused on DDoS protection and SSL orchestration. For the 10th consecutive year, the company was named a leader in the Gartner Magic Quadrant for Application Delivery Controllers. The Oppenheimer research firm also upgraded the company’s rating from ‘perform’ to ‘outperform’. Thus, strong fourth-quarter outlook, introduction of new products, and admirable margin make the stock a buy candidate.

The chart reveals the existence of firm support for the stock at 115 levels. The stochastic is rising out of the bearish zone. The next major resistance is at 126.

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