(By Balaseshan) FBN Securities analyst Shebly Seyrafi said the recent guidance provided by Cisco Systems Inc. (NASDAQ: CSCO) and NetApp Inc. (NASDAQ: NTAP) may suggest upside to F5 Networks Inc.'s (NASDAQ: FFIV) first quarter guidance of 13% to 15% year-over-year growth.
Seyrafi retained his "Sector Perform" rating and $100 price target on F5 Networks following its Analyst's Day. The company provided no real update on the current quarter but did note that its pipeline is "solid".
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The analyst remains neutral as the company previously noted a more challenging environment for US enterprise and telecommunications deals (especially $1 million-plus deals), and there could be some pause in front of the large appliance refresh that is coming soon.
The new TMOS upgrade (Solar v. 11.3) will add 76 new features and should also be coming out by the end of the year, Seyrafi noted. FFIV is striving to accelerate its license growth over the next year, partly by increasing its headcount (sales headcount is now at 998, up 19% year-over-year).
Over the coming months, FFIV will be updating all of its BIG-IP appliances. The analyst noted the 1600 (1Gbps throughput) will be replaced by a 2000 (5Gbps), the 3600/3900 (2/4Gbps) will be replaced by a 4000 (10Gbps), the 6900/8900 (6Gbps/20Gbps) will be replaced by the 5000/7000 (40Gbps each), and the 11000/11050 will be replaced by the 10000 series (80Gbps).
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The analyst expects most of the refreshes to occur by the end of the year, with the exception of the 5000 and 7000 series which should occur in early/mid-2013.
FFIV believes that its application delivery networking (AND) market will grow from $5 billion in 2012 to $14 billion in 2016, and with the addition of other markets like service provider, and security it is projecting a TAM of $19.6 billion in 2016.
FFIV is trading down 0.75% at $86.84 on Thursday.