F5 Networks (FFIV) is trading sharply higher after the markets opened. The company also released its fiscal fourth-quarter earnings last night. Earnings per share (EPS) of $2.59 vs. $2.90 was $0.04 above expectations. FFIV’s revenue of $590.4 million was up 5% and was better than the expectation of $582.9 million.

The higher-than-expected revenue and earnings reflect the success of the company’s efforts to transition into a software company that aids enterprises in launching applications in multi-cloud environments.

While earnings are currently under pressure due to investments that are related to these efforts and the dilutive impact of the NGINX acquisition, FFIV is demonstrating that it is moving in the right direction. EPS comparisons should turn positive in the coming fiscal year. The company’s efforts will also be helped by a recently signed collaboration agreement with Amazon Web Services (AWS) to help companies build and launch their applications on AWS.

With the stock selling for less than 14X fiscal 2020 EPS of $11.15, and with $20 a share of cash on the balance sheet, FFIV remains undervalued.

I am raising my buy under price to $150. My new target is $170.