F5 Networks, Inc. (NASDAQ:FFIV) shares were in a sharp decline [-3.3%] on Wednesday morning, after the application services giant received a big downgrade from analysts at Deutsche Bank.

Written by StockNews.com

Deutsche analyst Dr. Vijay Bhagavath explained the bearish view in a note to clients:

“Ours is a Fundamental Call into FY18 (not a conviction call on the Mar Q report).

We are calling for -30% downside to current levels.

Our SELL FFIV thesis argues for deceleration in Product and Services revenues into FY18 with headwinds from:

1. Cloud Load Balancers from AWS, Azure, GCP meaningfully improving in Price/Performance (INTC Skylake refresh as a catalyst);
2. FFIV selling mainly into “North South” versus “East West” load balancing (East West traffic seeing exponential growth);
3. FFIV’s Cloud Security opportunity competed away by AKAM, CSCO (DB View).”

Accordingly, Bhagavath also cut his full-year 2017 EPS estimate for FFIV from $8.10 to $8.08, and lowered his 2018 EPS view from $8.71 to $8.50. The analyst left his 2019 EPS estimate intact at $8.75.

Headquartered in Seattle, F5 provides application delivery networking products that optimize the security, performance, and availability of network applications, servers and storage systems. The company has seen huge revenue gains in recent years, nearly doubling its sales since 2011, as demand for its security-rich services spikes amid the proliferation of the Internet Of Things (IOT).

F5 Networks shares fell over 3% in premarket trading Wednesday on the news. Year-to-date, FFIV had gained 1.67% prior to today’s downgrade, versus a 5.27% rise in the benchmark S&P 500 index during the same period.

FFIV currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #6 of 39 stocks in the Software – Business category.