Wanting to like a stock is always dangerous, and that's the position I find myself in with F5 Networks (NASDAQ:FFIV).
While I do believe that demand for application delivery controllers (or
ADCs) is on the wane and likely to push market growth into the single
digits, I also believe that the company has a significant opportunity in
attaching security products and pursuing SDN/NFV and diameter signaling
revenues.
The problem is identifying what's going to drive a
meaningful improvement in the value proposition and/or investor
sentiment. The shares look only slightly undervalued on the basis of 7%
to 8% long-term growth and the company likely needs to generate
double-digit product revenue growth again to get a real tailwind behind
the shares. I continue to believe that F5 is a high-quality company that
is not overvalued, but it's more difficult to argue that this is a
must-own stock today.
Read more here:
Absent Product Revenue Growth, What Drives F5 Networks?
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