Over the transom this morning comes a missive on F5 Networks (FFIV) from Merrill Lynch’s Tal Liani, raising the price target on the stock to $145 from $136, writing that Intel’s (INTC) newest chip for server computers, “Romley,” should prompt a server upgrade that will pay dividends for F5 and competitor Cisco Systems (CSCO).
Romley, which was formally introduced in early March, and for which the company hosted an East Coast discussion with analysts last week, “supports 10GbE interfaces on the motherboard and roughly doubles the theoretical number of virtual servers,” writes Liani.
“This could result in more flexible clouds, and increased efficiency and utilization rates for servers � all ultimately resulting in greater demand for ADCs,” opines Liani, referring to the “application delivery controllers” that F5 sells.
Lianai sees Romley complementing F5′s newer products, such as the “TMOS v. 1.1″ operating system upgrade, and F5′s “Viprion 2400″ appliance. Liani also sees the buildout of wireless networks increasing the uses of F5′s gear.
Liani’s price target implies a 27 times P/E multiple of her calendar 2015 estimate for $5.45 per share in net profit. That multiple, writes Liani, is consistent with what’s being afford to shares of Citrix Systems (CTXS), an appropriate compare, in Liani’s view.
F5 shares today up $2.16, or 1.6%, at $138.82.
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