Goldman Sachs Reiterates Neutral Rating on F5 Networks (FFIV)

Goldman Sachs analyst Michael Ng reiterated a Neutral rating and $300.00 price target on F5 Networks (NASDAQ: FFIV)

The analyst comments "FFIV’s F2Q25 EPS of $3.42 beat GS/consensus of $3.21/$3.10 on lower taxes (+$0.16 v. GSe) and Other income (+$0.11). EBIT of $233 mn was between GS of $238 mn and consensus of $228 mn. Revenue of $731 mn, which was largely in-line with our estimate beat on Systems revenue, but missed on Software revenue (flat yoy). Although FFIV raised F2025 revenue and EPS guidance, the upside was largely from a lower tax-rate. First, systems refresh demand is strong and should benefit from the upcoming systems end-of-support for iSeries (1/2027) and Viprion (4/2026), which make up over 50% of the systems installed base. Although FFIV expects the refresh to extend into 2026, FFIV is guiding for material sequential decline in F2H25 Systems revenue, which we view as conservative given the refresh demand and MSD% price increases. Second, software revenue was flat yoy, missing our estimate, but FFIV is guiding to >10% software revenue growth in F2025, with the growth acceleration in F2H25 driven by the availability of more software renewals; fewer software renewals will be a headwind to growth in F2026. Third, FFIV expects a LSD $, millions impact from tariffs, which should be offset through efficiency in manufacturing & support, which represents FFIV’s low tariff exposure across its systems business given that the majority of its finished goods are USMCA compliant and duty free on import into the US. FFIV has seen no near-term demand erosion to-date due the trade policy and growth uncertainty."

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Shares of F5 Networks closed at $265.07 yesterday.

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