F5 Networks Has Strong Software Growth Ahead, Says BofA Securities Analyst

F5 Networks, Inc FFIV could generate significant growth in 2022 on the back of contract renewals, according to BofA Securities.

The F5 Networks Analyst: Tal Liani upgraded the rating for F5 Networks from Neutral to Buy, while raising the price target from $210 to $285.

The F5 Networks Thesis: The company reported better-than-expected results for its third quarter, with software growing 34% year-on-year, ahead of Street expectations of 28%, Liani said in the upgrade note.

The analyst cited SaaS vertical and 5G wireless among F5 Networks’ fundamental growth drivers. “We also believe the 4Q growth hurdle is low, at 28% implied guidance for software growth,” he added.

“With multi-year deals hitting the market in mid-2019, we see high growth potential starting mid-2022, which could drive share price appreciation,” Liani further wrote.

Liani raised the earnings estimates for 2022 and 2023 from $11.71 per share to $12.01 per share and from $13.11 per share to $13.46 per share, respectively.

FFIV Price Action: Shares of F5 Networks were down 1.19% to $202.15 at the time of publication Wednesday.

Photo: Courtesy of F5 Networks