Needham & Company lowered its rating on F5 Networks (FFIV) on Tuesday morning. Here’s what the move means for mutual fund investors.
Inside the Analyst Move
Needham & Company has downgraded F5 Networks from “Buy” to “Hold” on a valuation call.
According to analyst Alex Henderson: “We continue consider F5 Networks to be the best run company in our coverage. We see the company as well positioned and likely to produce solid growth in CY15 and CY16. However, the stock is now at our $130 Target Price. FFIV shares appreciated over 45% in CY15 (vs up ~17% fpr tje S&P 500). At current prices it is already selling at 20x CY16E P/E and 17x CY16E EV/E. F5 benefited from easy comps throughout CY14 but is confronted with more challenging comps in CY15. We think growth is likely to decelerate.”
Less Expensive Momentum Stock
This stock is a favorite among traders, but is less expensive than typical momentum stocks. Its PEG is around 2:1, which is unusual for a higher beta stock. Despite its attractive pricing, this stock would be more ideal for an aggressive investor.
Mutual Funds to Watch
Investors interested in F5 Networks may consider one of the mutual funds listed below. These funds currently hold the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VMCIX | Vanguard Mid Cap Index | 1.76% |
| VTSMX | Vanguard Total Stock Market Index | 2.45% |
| VFINX | Vanguard 500 Index | 1.67% |
The Bottom Line
The funds above offer investors a diverse group of holdings. Investors interested in FFIV may also be interested in Cisco Systems (CSCO) and International Business Machines (IBM).