Network-gear makers fall on F5 Networks weak outlook
(Reuters) - Shares of network-gear makers fell in Thursday morning trade, a day after a leading company forecast weak second quarter, raising concerns about the pace of growth in internet traffic.
F5 Networks, which has outperformed market expectations for the past seven quarters, said on Wednesday it sees second-quarter revenue below analyst expectations.
F5's bigger rival Cisco Systems' (CSCO.O) shares fell 1 percent, while those of Riverbed Technologies (RVBD.O) fell 5 percent.
Shares of other network-gear makers like Blue Coat Systems (BCSI.O) slid 9 percent, while Cavium Networks (CAVM.O) lost 7 percent.
The broader S&P 1500 Communications Equipment Industry Index .15GSPCOEQ was down 2 percent.
F5 Networks, a leader in the network optimization market, has been benefiting from the need to manage bandwidth as millions of smartphone and tablet users grow data traffic.
"Due to high expectations and a miss, the stock will likely be weak, but we still like the name," Wedbush Securities said.
The brokerage cut its price target on the F5 stock to $128 from $155 based on valuation, but maintained its "outperform" rating.
Credit Suisse, however, raised its rating on F5's stock to 'outperform' from 'neutral,' and price target to $134 from $103, citing expectations of margin expansion and growth in its Application Delivery business.
Shares of the company were down 18.9 percent at $112.5 in morning trade on Nasdaq. They touched a low of $109.53 in early trade.
(Reporting by Siddharth Cavale in Bangalore; Editing by Vyas Mohan)
Credit: Reuters (www.reuters.com)
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