F5 Networks Stock Lands Rare Upgrade

FFIV short-term options look attractively priced

Managing Editor
Mar 29, 2019 at 10:50 AM
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Web application developer F5 Networks, Inc. (NASDAQ:FFIV) is up 2.3% to trade at $157.18, just after landing an upgrade to "neutral" from "underweight" and a price-target hike to $163 from $157 at Piper Jaffray. The firm said its bull note comes despite continued concerns about the company's "longer-term dynamics," but noted the current valuation is "reasonable" and leaves "a more balanced risk-reward profile than six months ago."

On the charts, F5 Networks stock has shed nearly 22% from its late-September high just south of $200, with the stock touching an 11-month low on March 12, due to an M&A-related bear gap. Today, however, FFIV shares are set to conquer their 20-day moving average for the first time this month.

Unsurprisingly, analyst attention has been bearish toward the tech name. Just two of the 14 brokerage firms following FFIV offer up a "strong buy" recommendation, compared to nine carrying a tepid "hold" and three sporting a "strong sell." In the same vein, FFIV's average 12-month price target of $167.77 represents just 7% upside to current levels.

Optimism is more prevalent in the options pits, though, per the security's 10-day call/put volume ratio of 3.19 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands in the 88th percentile of its annual range, suggesting FFIV calls have been bought over puts at a faster-than-usual clip in the past two weeks.

Short-term options on FFIV are attractively priced, too. The equity sports a Schaeffer's Volatility Index (SVI) of 21%, that stands in the low 8th percentile of all other readings from the past year, suggesting near-term options are pricing in low volatility expectations at the moment.

 


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