Pre-Earnings Skepticism Builds On F5 Networks, Inc. (FFIV)

F5 Networks, Inc. (FFIV) will unveil its fiscal first-quarter earnings report after tonight's close

by Karee Venema

Published on Jan 21, 2015 at 2:24 PM
Updated on Apr 20, 2015 at 5:10 PM

Although F5 Networks, Inc. (NASDAQ:FFIV) has averaged a single-session post-earnings gain of 2.3% over the past four quarters, skepticism has been building ahead of tonight's fiscal first-quarter results. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day put/call volume ratio has jumped to 1.76 from 0.56 over the past two weeks. What's more, the current ratio ranks in the 96th annual percentile, meaning puts have been bought to open over calls at a near-annual-high clip.

This bias toward puts over calls is echoed in the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.77, which rests higher than 74% of similar readings taken in the past year. In other words, short-term speculators are more put-skewed than usual toward FFIV.

This glass-half-empty approach is witnessed elsewhere on the Street, as well. Of the 27 analysts covering the shares, 12 maintain a tepid "hold" recommendation, versus 15 "buy" or betters. Additionally, FFIV's average 12-month price target of $134.29 represents expected upside of just 6.2% to the stock's present perch at $126.48.

On the charts, FFIV has been consolidating near its 80-day moving average -- currently located at $124.96 -- since topping out at a two-year peak of $136.11 on Dec. 24. Longer term, the equity has tacked on 30% over the past 52 weeks. Should F5 Networks, Inc. (NASDAQ:FFIV) unveil another well-received earnings report, an unwinding of skepticism in the options pits and/or a round of bullish brokerage notes could help FFIV extend its year-over-year advance.


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