Google is driving a ton of stocks, including the F5 Networks (FFIV)-like Web infrastructure plays.

Another takeover candidate, F5 Networks, which has a market valuation of $3.8 billion, sells products that improve the functionality of enterprises using virtualization technology. Its offerings include software that balances the load of activity on computer servers used by Web farms, big clusters of servers that are outsourced to corporate customers. Male suggests that HP, Juniper Networks and possibly IBM, Dell and NEC could be interested in F5. F5 is a "cheaper stock" than Riverbed because revenue growth has fallen during the recession, Price says. But he isn't worried. The portfolio manager says that transaction volume at online sites has fallen as much as 50%, which means Web farms don't need to increase capacity. Price thinks the stock is misunderstood and that revenue will bounce back as online commerce rebounds with the broader economy. "It just got hit hard by the recession," Price says. "I don't understand why this company is still public."

Outperform -- Price 19.45 on March 17
by Pacific Crest

F5 Networks has become a critical enterprise supplier in the data center, uniquely positioned as an intelligent appliance that resides at a key integration point between applications, servers, storage and networking fabrics. Even assuming another 25-cent cut to our [fiscal] 2009 EPS estimate of $1.50, the risk-reward on FFIV is favorable, with downside to 18 and upside to 30 based on P/E multiples of 13 times to 18 times. The stock, trading at 4.4 times 2009-E [enterprise value/earnings before interest, taxes, depreciation and amortization] appears to be undervalued...F5's solid operating track record, new product cycle, strong balance sheet and differentiated technology assets warrant a premium valuation, in our view. Market and macroeconomic conditions could interfere. Market cap: $1.6 billion.

The two companies he likes are Skyworks Solution (SWKS) and F5 Networks (FFIV).

F5 Networks: Know Your Options
Options editor Steve Smith sees bearish options activity in F5 Networks. Here's how he would play it.

Click here to watch the video.

Potentialy Could Rise

F5 Networks Inc., which makes software to help manage Internet traffic, said last week that its board has approved the repurchase of up to $200 million of its common stock.

The software maker F5 Networks Inc. also recently reported better first-quarter results than many investors expected, and a Robert W. Baird & Co. analyst upgraded the stock based on its low valuation.

In upgrading the stock to "Outperform" from "Neutral," analyst Kenneth Muth said that even though fiscal first-quarter revenue fell slightly below his estimate, several of the company's segments actually outperformed. Also, the company's fiscal second-quarter guidance, though just shy of Wall Street's consensus, may boost the stock since many investors had low expectations.

F5 Networks (FFIV) was upgraded to Outperform, Robert Baird said. $33 price target. Fundamentals are stable, and the company will see a major product upgrade cycle in 2008. Low valuation is also attractive on a historical basis.

F5 Networks (FFIV) was downgraded to Hold rating from Buy at Jefferies. Price target cut to $26 from $50 and FY 2008 eps estimates dip to $1.43 from $1.51.

F5 Networks (FFIV) was upgraded from Hold to Buy, Citigroup said. $44 price target. Company still faces challenges over the next quarter or two, but fundamentals and sentiment appear to have reached a low point.

earnings miss - tough industry/sector