F5's Growth Is Far From Over

Server virtualization, mobile computing, and data center consolidation have led to rapid data traffic growth and increased network complexity, and  F5 Networks (FFIV) has been a primary beneficiary of these secular trends. The firm's core products--application delivery controllers, or ADCs, which direct data traffic to and from web and application servers--have become key components in data center environments. F5 has steadily gained market share, largely at  Cisco's (CSCO) expense, and the firm now enjoys roughly 50% market share.

We believe the application delivery controller market will continue to grow, and we expect F5's revenue to grow faster than the overall market as it continues to gain share and drive incremental services revenue. F5 is also well positioned to gain share in the $6.5 billion network security market, and we expect product revenue growth to accelerate throughout 2013.