Citigroup analyst analyst John Slack this morning launched coverage on F5 (FFIV), Riverbed (RVBD) and Brocade (BRCD), setting Hold ratings on the first two companies and a Buy rating on the last.
- F5: Hold rating, $78 target. Slack says the company is well-positioned to benefit from data center consolidation, server virtualization and mobile data growth. But he adds that “with investor expectations creeping higher, we believe there is limited opportunity for incremental upside to estimates in the near-term,” and adds that ” with its shares trading at 2x the market multiple, we are hard-pressed to justify adding to positions at current levels.”
- Riverbed: Hold rating, $31 target. Slack notes that the company is a leading pure-play in the WAN optimization controller market, but notes that it trades at 28x his FY 2012 GAAP EPS estimate, and adds that the company’s management appears to be focusing on growth over profitability for the near term. He also says that the company faces growing competitive risks.
- Brocade: Buy rating, $7.50 price target. “Given the missteps over the past year, we appreciate the healthy amount of investor skepticism surrounding BRCD�s ability to execute on a consistent basis in both its IP and SAN business,” he writes. “That said, we believe Brocade share represent an opportunity for patient investors with a 1+ year time frame, given its enviable cash flow profile, and the fact that investor expectations are at trough levels.”
In today’s trading:
- FFIV is up $2.59, or 3.8%, to $71.28.
- RVBD is up $53 cents, or 1.9%, to $28.53.
- BRCD is up 20 cents, or 3.9%, to $5.49.
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