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.

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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.

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F5 Networks (FFIV) was downgraded from Overweight to Market-weight at Thomas Weisel. Cautious about the Acopia acquisition, given the price and management's track record of integrating deals. $70 price target.

earnings miss - tough industry/sector