What Happened: Shares of network application delivery and security specialist F5 (NASDAQ:FFIV) fell 10.5% in the morning session after the company reported first-quarter results with revenue and EPS guidance for the next quarter falling below analysts' expectations. Its revenue and billings missed Wall Street's estimates during the quarter. The company called out macro concerns, adding, "Customers remain cautious and are forecasting largely flat IT budgets for calendar 2024." Overall, this was a weaker quarter for F5.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy F5? Find out by reading the original article on StockStory, it's free.
What is the market telling us: F5's shares are not very volatile than the market average and over the last year have had only one move greater than 5%. Moves this big are very rare for F5 and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 9 months ago, when the stock gained 7.2% on the news that the company reported third-quarter results that narrowly beat analysts' revenue expectations. On a brighter note, earnings per share beat by an impressive 12%. Free cash flow also improved significantly compared to the previous quarter. Management added some bullish comments, stating that demand is stabilizing and that F5 Networks (NASDAQ:FFIV) should be able to grow non-GAAP EPS by a double-digit percentage, which is higher than expectations. That really stood out as a positive in these results.
On the other hand, its underwhelming revenue guidance for next quarter was disappointing (although next quarter's EPS guidance was in-line). Overall, this was a mixed quarter for F5 Networks, but the double-digit percentage non-GAAP EPS growth for the full year is being received well.
F5 is down 6.5% since the beginning of the year, and at $164.58 per share it is trading 16.1% below its 52-week high of $196.07 from April 2024. Investors who bought $1,000 worth of F5's shares 5 years ago would now be looking at an investment worth $1,050.
