F5 Networks (FFIV) has been working towards growing the software in its business to further growth. In line with the company’s strategy, F5 acquired NGNIX. While an expensive acquisition, we think NGNIX is transformational for F5’s business and is likely to help F5 break away from the image of a traditional IT solutions provider. The resulting growth could lead to a 40%+ return from the F5 stock.
Company description
F5 Networks operates in the application services market, with a focus on multi-cloud environments. The company’s focus on layer 4-7 services helps organizations achieve