F5 Networks (NASDAQ:FFIV) Still Needs Upside Surprises to Maintain Share Price

Before the latest earnings report from F5 Networks (NASDAQ:FFIV), Ticonderoga said the company will need more earnings surprises in order to maintain their soaring share price. They didn't get it, and unless they do again in the future, F5 will being to operate at a much lower multiple.

Ticonderoga says, "Last night, F5 Networks reported record sales of $268.9 million in 1QFY11 that was well below our estimate of $283.9 million, while pro forma EPS of $0.88 also came in lower than our estimate of $0.93. As such, F5's 1QFY11 results were marginally below the Street's revenue projection of $270.6 million while pro forma EPS was above the Street's pro forma EPS estimate of $0.83. We warned in our earnings preview that F5 would need to continue delivering big upside surprises to support the stock price and with only a mediocre quarter, F5's stock was down 22% in after market trading last night.

"Looking into 2QFY11, F5 expects moderate growth with sales of $275 million to $280 million, with pro forma EPS of $0.84 to $0.86. We are decreasing our 2QFY11 revenue estimate to $287 million from $307.6 million and reducing our pro forma EPS projection to $0.93 from $1.03. We are also cutting our fiscal 2011 revenue estimate to $1.21 billion from $1.28 billion and pro forma EPS estimate to $4.02 from $4.40."

Ticonderoga reiterates a "Neutral" rating on F5 Networks (FFIV), which trading at $108.00, down $30.78, or 22.18 percent, as of 1:22 PM EST.