Sentiment, Seasonality Could Send F5 Networks, Inc. (FFIV) Higher Next Week

F5 Networks, Inc. (FFIV) has been the best stock to own the week after inauguration, going back to 2000, but Wall Street is skeptical ahead of earnings

Jan 20, 2017 at 12:37 PM
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Software concern F5 Networks, Inc. (NASDAQ:FFIV) is looking ahead to a busy week, set to deliver its latest earnings report next Wednesday. What's more, FFIV has been the strongest S&P 500 Index (SPX) stock the week after a presidential inauguration since 2000, higher 100% of the time with an average return of 12.06%. While that's a relatively small sample size, with heavy bearish sentiment surrounding the stock, and seasonality working in FFIV's favor, a positive earnings reaction could translate into another big move higher.

So far today, FFIV is trading up 0.1% at $142.72. FFIV has been stair-stepping higher since February, and is up 58% year-over-year, notching a record high of $148.34 last month. An October pullback was contained by the shares' 126-day moving average, which has been significant since the third quarter of 2015, and the $135 level -- home to FFIV's 2014-2015 highs -- acted as support in November. In addition, the $140 level, home to FFIV's 2012 highs, could act as support. However, FFIV is currently on pace to finish below its 10-week moving average for the first time since late October. 


FFIV's typical one-day, post-earnings move over the last eight quarters has been a 5.6% swing in either direction. However, option players are pricing in a bigger-than-usual 7.9% post-earnings move for the stock, and last quarter FFIV racked up a 9.6% gain in the session after earnings.

Despite FFIV's technical strength, short sellers have been hot on the shares, and short interest accounts for 6.4% of FFIV's float, which would take nearly two weeks of trading to cover, at FFIV's average daily volume. If FFIV manages to make another sharp move higher after earnings, a sudden exodus of these short sellers could act as fuel to push F5 Networks, Inc. (FFIV) shares to even higher highs. In addition, the brokerage bunch has been lukewarm toward the stock, with 17 of 23 rating the shares a tepid "hold" or worse. A round of upgrades could also act as tailwinds for the shares.

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