F5 Networks (FFIV) reported third-quarter earnings per share of 35 cents, and sees 29-30 cents in the fourth quarter after charges. Pacific Growth downgraded the stock on the news.
Analyst Eric Suppiger says he downgrades F5 Networks to equal-weight from overweight on his belief that the company will not be able to sustain the hyper-growth it's achieved in recent years. He feels F5 is still well positioned with market leading technology, but thinks market demand has slowed in some regions and organizational changes at the company create sales execution risk.
He notes that third-quarter results beat his and the consensus estimates marginally; also, the company guided fourth-quarter revenues to increase 4%-7% to $76 million to $78 million and gross margins to remain at 76%-77%.
Suppiger ups his $1.28 fiscal year 2005 (September) EPS estimate to $1.31, and $1.62 fiscal year 2006 to $1.68.