After Rising 9% In A Week, Is F5 Networks Stock Still A Buy?

by Trefis Team
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Upside
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Trefis
FFIV
F5 Networks
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F5 Networks stock (NASDAQ: FFIV) has seen an impressive rise of 9% over the past week and currently trades at $203 per share. This rally was driven by strong Q3 2021 earnings reported by the company, where revenue rose to $652 million, up from $583 million for the same period last year. Operating income also rose in line with revenue growth to $96 million from $88 million in Q3 2020. A drop in the effective tax rate further boosted profitability, driving EPS to $1.49 from $1.15 over this period.

After the recent rally, will FFIV stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for FFIV stock average close to 4.4% in the next one-month (21 trading days) period after experiencing an 8.6% rise over the previous one week (5 trading days) period. The stock has a decent 61.7% probability of rising over the next one month. But how would these numbers change if you are interested in holding FFIV stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test F5 Networks stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF F5 Networks stock moved by -5% over five trading days, THEN over the next 21 trading days, FFIV stock moves an average of 3 percent, with a strong 61.5% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of F5 Networks Stock Movements:

Question 1: Is the average return for FFIV stock higher after a drop?

Answer:

Consider two situations,

Case 1: FFIV stock drops by -5% or more in a week

Case 2: FFIV stock rises by 5% or more in a week

Is the average return for FFIV stock higher over the subsequent month after Case 1 or Case 2?

F5 Networks stock fares better after Case 1, with an average return of 3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how FFIV stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold F5 Networks stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For F5 Networks stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

FFIV’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for F5 Networks stock by changing the inputs in the charts above.

While F5 Networks stock could see further upside, it is helpful to know how its peers stack up. F5 Networks Comparison With Peers summarizes how F5 Networks compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

 

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