F5 Networks Potential Buyers: Hewlett Packard, EMC And Cisco Lead The Way

Several media reports have indicated F5 Networks, Inc. (NASDAQ: FFIV) has hired Goldman Sachs to review takeover interest. Citi’s Jim Suva maintained a Neutral rating for the company, with a price target of $110. The analyst commented that the price target did not include any acquisition premium, although the industry was consolidating.

F5 Networks’ stock had underperformed the market over the last couple of years, prior to the 13 percent rally on news reports of a possible sale of the company. F5 Networks’ shares lost 1 percent versus the S&P trading up 11.29.

“We note F5 Networks cash flow is very strong with the company reporting $702m in cash flow from operations in 2015 and we project $630m in cash flow for 2016,” analyst Jim Suva wrote.

Related Link: F5 Networks Spikes On Rumors Of Talks With Goldman For Possible Sales

Potential Buyers

Suva considers potential buyers as Hewlett Packard Enterprise Co (NYSE: HPE), Dell, EMC Corporation (NYSE: EMC), Cisco Systems, Inc. (NASDAQ: CSCO) and private equity.

“According to Gartner and their magic quadrant, competitors include Radware and Citrix, challengers are A10 Network and niche players include Brocade, Barracuda Networks, Array and AWS,” the analyst mentioned.

Suva believes the most likely suitor is Hewlett Packard Enterprise, after the sale of its services business to Computer Sciences Corporation (NYSE: CSC). The next best suitors would be private equity. He added that the acquisition premium for F5 Networks could range from 15-30 percent.