F5 ( NASDAQ: FFIV ) shares slipped on Thursday as investment firm Credit Suisse downgraded the networking company, noting recent spending weakness.
Analyst Sami Badri lowered the firm's rating on F5 ( FFIV ) shares to neutral and cut the price target to $167 from $225, noting that has a "tough setup" going into its fiscal third-quarter results.
Badri noted that enterprise customers are showing “continued enterprise demand” but channel checks suggest that enterprises are turning to web-hosting and managed service providers as opposed to waiting for equipment shipments, curtailing demand.
Government customers have also slowed decision making and spending dynamics have slowed as well, Bardi pointed out.
"Given less constructive outlook checks and continued supply chain constraints, we see little capacity for FFIV to beat-raise in the quarter and outperform versus expectations, sidelining us," Badri wrote in a note to clients.
F5 ( FFIV ) shares fell more than 2.5% to $145.50 in premarket trading.
In addition, Badri lowered software growth in the fiscal fourth-quarter to 39.2%, while also cutting estimates for fiscal 2023, lowering gross margins and earnings per share below analysts' consensus.
"We continue to identify FFIV as a key network vendor in the enterprise transition to multi-cloud, boasting technologically differentiated technology, but move to the sidelines to account for dynamics FFIV [management] cannot control (like supply chain constraints)," the analyst wrote.
According to Bespoke Investment Group, F5 ( FFIV ) was one of the top 20 companies that saw the biggest drop in share price during last earnings season .
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F5 slips as Credit Suisse downgrades, citing recent spending weakness for networking IT