F5 Networks (NASDAQ:FFIV) Product Cycle Looks Strong Says Wells Fargo (NYSE:WFC)

Citing a strong management team and new product cycle, Wells Fargo sees F5 Networks (NASDAQ:FFIV) sales and non-GAAP EPS estimates coming in at the upper end of guidance.

Wells says, "Following a series of positive checks and a solid pipeline entering FQ1, we see potential for upside to our sales and non-GAAP EPS estimates of $270MM and $0.82, which are at the high-end of guidance ($265-270MM and $0.80-0.82). Our estimates are roughly in line with the Street $270MM and $0.83. We believe F5's Q4 results benefitted from robust data center investment within the technology vertical and increased traction with carrier accounts. We forecast gross and operating margins of 82.3% (-10bps qtr/qtr) and 37.4% (-40bps qtr/qtr), yielding non-GAAP EPS of $0.82. A likely $5MM of revenue upside would add $0.02-0.03 to our EPS estimate.

"With a strong new product cycle and a solid management team, we believe F5 will gain share in the $1B+ market for ADCs. With a number of secular drivers firmly in place we believe this market will grow 20% long term."

Wells Fargo reiterates an "Outperform" on F5 Networks, which closed Monday at $142.69, gaining $4.34, or 3.14 percent. Wells has a valuation range of $147-$157 on F5.