Radware Ltd.Despite macro headwinds, Radware saw strong momentum in EMEA and improved margins across...

Ittai [email protected]

Tim Eby212 [email protected]

Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. Asa result, investors should be aware that the firm may have a conflict of interest that could affect theobjectivity of this report. Investors should consider this report as only a single factor in making theirinvestment decision. See "Important Disclosures and Certifications" section at the end of this report forimportant disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risksto Price Target" sections at the end of this report, where applicable.

Stock Price Performance

Q1 Q2 Q3 Q18

16

24

32

40

48

2011 2012

1 Year Price History for RDWR

Created by BlueMatrix

Company Description

Radware develops, manufactures and marketsload-balancing equipment and securityproducts that enable Internettraffic-management solutions for serviceproviders and enterprises.

February 1, 2012 TECHNOLOGY/COMMUNICATION TECHNOLOGY

Stock Rating:

OUTPERFORM12-18 mo. Price Target $36.00

RDWR - NASDAQ $31.47

3-5 Yr. EPS Gr. Rate 15%

52-Wk Range $43.13-$18.98

Shares Outstanding 20.5M

Float 17.3M

Market Capitalization $643.9M

Avg. Daily Trading Volume 102,606

Dividend/Div Yield NA/NM

Fiscal Year Ends Dec

Book Value $9.65

2012E ROE 17.4%

LT Debt $0.0M

Preferred NA

Common Equity $219M

Convertible Available No

EPS ProFormaQ1 Q2 Q3 Q4 Year Mult.

2010A 0.18 0.21 0.26 0.29 0.92 34.2x

2011A 0.27 0.32 0.34 0.42 1.35 23.3x

Prior (E) -- -- -- 0.38 1.30 24.2x

2012E 0.35 0.37 0.41 0.46 1.58 19.9x

Prior (E) 0.31 -- 0.40 0.45 1.53 20.6x

2013E -- -- -- -- 1.81 17.4x

Prior (E) -- -- -- -- 1.92 16.4x

Revenue

($/mil)

Q1 Q2 Q3 Q4 Year Mult.

2010A 33.1 35.2 36.8 39.1 144.1 3.9x

2011A 38.6 41.1 42.2 45.1 167.0 3.4x

Prior (E) -- -- -- 44.9 166.9 3.4x

2012E 44.0 45.5 47.3 50.6 187.4 3.0x

Prior (E) 43.1 45.3 -- 50.3 186.1 3.0x

2013E -- -- -- -- 205.5 2.7x

Prior (E) -- -- -- -- 204.2 2.7x

Radware Ltd.Extending its Reach

SUMMARY

In line with our channel checks, Radware delivered strong December-quarter

results ahead of consensus estimates and guided above expectations for 1Q12.

Despite macro headwinds, Radware saw strong momentum in EMEA and improved

margins across the board. Looking ahead, the company appears to be on track to

expanding its TAM through its growing AMS business and its Juniper OEM

relationship, which is in the proof-of-concept phase at multiple Tier-1 carriers with

revenue expected in 1Q12. TAM expansion is still in the early stages and execution

remains critical, but we believe things are moving in the right direction. We maintain

our Outperform rating and have raised our estimates and our price target from $34

to $36.

KEY POINTS

■ Strong December. Radware's December results beat Street estimates with

sales of $45.1M and EPS of $0.42 (Street $44.3M, $0.37). Despite macro

headwinds, EMEA delivered strong QoQ growth after declining sequentially in

3Q11 and the US grew solidly. Margins improved across the board.

■ Positives. Service provider revenue grew 14% QoQ. After declining last

quarter, EMEA revenues increased 23.6% sequentially. GM improved to 82.1%

and OM increased nearly three points to 19.7%. Deferred revenue grew

sequentially. AMS grew more than the core ADC business.

■ Negatives. Solid results this quarter but RDWR's growth rate still lags FFIV's.

OpEx is set to rise in sales, marketing, and R&D in 2012. Following a strong

3Q11, APAC revenue declined 6.2% sequentially. Enterprise revenue increased

just modestly at 3.8% QoQ. The tax rate is set to increase through 2012.

■ Juniper OEM on-track. Juniper-OEM products are now in the labs of multiple

Tier-1 providers for proof-of-concept trials, and Radware expects to recognize

initial revenue in 1Q12. We are encouraged by this progress, but caution that

carrier qualification cycles tend to be long and execution is non-trivial. We

expect revenues to grow gradually through 2012.

■ Maintain Outperform. Given Radware's strong results and guidance, we have

raised estimates. We are pleased with Radware's execution and believe it has

potential to expand its limited reach through its new partnerships. We see

momentum building and remain buyers of the shares. Maintain Outperform.

EQUITY RESEARCH

COMPANY UPDATE

Oppenheimer & Co Inc. 300 Madison Avenue New York, NY 10017 Tel: 800-221-5588 Fax: 212-667-8229

3

Radware Ltd.

Quarterly Consolidated Statement of Income ($ in Thousands, Except Per Share Data)

1Q11A 2Q11A 3Q11A 4Q11A 1Q12E 2Q12E 3Q12E 4Q12E

2010A Mar-11 Jun-11 Sep-11 Dec-11 2011A Mar-12 Jun-12 Sep-12 Dec-12 2012E 2013E

Total Revenue $144,119 $38,619 $41,115 $42,196 $45,090 $167,020 $43,963 $45,501 $47,322 $50,634 $187,420 $205,498

Cost of Sales 27,384 7,323 7,761 7,978 8,065 31,127 7,913 8,190 8,518 9,114 33,736 36,990

Gross Profit $116,735 $31,296 $33,354 $34,218 $37,025 $135,893 $36,049 $37,311 $38,804 $41,520 $153,684 $168,508

Research & Development 30,413 8,451 8,806 8,874 8,809 34,940 9,232 9,555 9,654 9,722 38,163 40,941

Sales & Marketing 59,932 15,375 16,137 16,130 17,082 64,724 16,926 16,836 17,272 18,228 69,262 75,970

General & Administrative 8,401 2,031 2,091 2,134 2,240 8,496 2,330 2,321 2,271 2,228 9,150 10,044

Operating Income (Loss) $17,989 $5,439 $6,320 $7,080 $8,894 $27,733 $7,562 $8,600 $9,606 $11,342 $37,110 $41,554

Interest Income (Expense) 2,978 1,339 1,231 1,009 1,093 4,672 1,100 900 900 900 3,800 6,000

Pre-Tax Income $20,967 $6,778 $7,551 $8,089 $9,987 $32,405 $8,662 $9,500 $10,506 $12,242 $40,910 $47,554

Taxes (Credit) 879 660 298 293 468 1,719 780 950 1,156 1,469 4,354 6,444

Pro Forma Net Income (Loss) $20,088 $6,118 $7,253 $7,796 $9,519 $30,686 $7,882 $8,550 $9,351 $10,773 $36,555 $41,110

Pro Forma EPS $0.92 $0.27 $0.32 $0.34 $0.42 $1.35 $0.35 $0.37 $0.41 $0.46 $1.58 $1.81

GAAP Expenses 9,825 1,729 2,323 2,398 2,398 8,848 2,428 2,447 2,489 2,572 9,937 10,822

GAAP Net Income $10,263 $4,389 $4,930 $5,398 $7,121 $21,838 $5,454 $6,102 $6,862 $8,200 $26,618 $30,288

GAAP EPS $0.47 $0.19 $0.21 $0.24 $0.31 $0.96 $0.24 $0.27 $0.30 $0.35 $1.15 $1.33

Shares Outstanding 21,734 23,024 22,976 22,782 22,716 22,749 22,830 22,944 23,058 23,174 23,116 22,771

Source: Company data, Oppenheimer & Co. Inc.

4

Radware Ltd.

Quarterly Margin and Growth Analysis



Margin Analysis

Gross Margin 81.0% 81.0% 81.1% 81.1% 82.1% 81.4% 82.0% 82.0% 82.0% 82.0% 82.0% 82.0%

Research & Development 21.1% 21.9% 21.4% 21.0% 19.5% 20.9% 21.0% 21.0% 20.4% 19.2% 20.4% 19.9%

Sales & Marketing 41.6% 39.8% 39.2% 38.2% 37.9% 38.8% 38.5% 37.0% 36.5% 36.0% 37.0% 37.0%

General & Administrative 5.8% 5.3% 5.1% 5.1% 5.0% 5.1% 5.3% 5.1% 4.8% 4.4% 4.9% 4.9%

Operating Income 12.5% 14.1% 15.4% 16.8% 19.7% 16.6% 17.2% 18.9% 20.3% 22.4% 19.8% 20.2%

Pre-Tax Margin 14.5% 17.6% 18.4% 19.2% 22.1% 19.4% 19.7% 20.9% 22.2% 24.2% 21.8% 23.1%

Effective Tax Rate 4.2% 9.7% 3.9% 3.6% 4.7% 5.3% 9.0% 10.0% 11.0% 12.0% 10.6% 13.6%

Pro Forma Net Income 13.9% 15.8% 17.6% 18.5% 21.1% 18.4% 17.9% 18.8% 19.8% 21.3% 19.5% 20.0%

QoQ Growth Rates

Revenue -1.1% 6.5% 2.6% 6.9% -2.5% 3.5% 4.0% 7.0%

Gross Profit -1.1% 6.6% 2.6% 8.2% -2.6% 3.5% 4.0% 7.0%

Operating Income -5.4% 16.2% 12.0% 25.6% -15.0% 13.7% 11.7% 18.1%

Pro Forma Net Income -6.8% 18.6% 7.5% 22.1% -17.2% 8.5% 9.4% 15.2%

Pro Forma EPS -7.7% 18.8% 8.4% 22.5% -17.6% 7.9% 8.8% 14.6%

YoY Growth Rates

Revenue 32.3% 16.7% 16.8% 14.8% 15.5% 15.9% 13.8% 10.7% 12.1% 12.3% 12.2% 9.6%

Gross Profit 31.1% 16.8% 16.9% 14.9% 17.0% 13.7% 15.2% 11.9% 13.4% 12.1% 8.4% 9.6%

Operating Income 390.4% 77.3% 57.2% 37.5% 54.6% 54.2% 39.0% 36.1% 35.7% 27.5% 33.8% 12.0%

Pro Forma Net Income 315.3% 72.5% 67.0% 38.3% 45.0% 52.8% 28.8% 17.9% 19.9% 13.2% 19.1% 12.5%

Pro Forma EPS 262.0% 51.5% 52.7% 33.1% 45.6% 45.9% 29.9% 18.0% 18.5% 10.9% 17.2% 14.2%


5

Radware Ltd.

Quarterly Consolidated Balance Sheet ($ in Thousands)



Assets

Cash & Cash Equivalents $178,789 $192,940 $203,604 $206,658 $219,137 $219,137 $234,988 $246,467 $258,599 $273,419 $273,419 $322,894

Account Receivables 16,543 14,664 16,050 17,661 12,565 12,565 12,251 12,680 13,187 14,110 14,110 15,100

Prepaid Expenses & Other 3,402 3,048 3,982 3,453 3,625 3,625 3,598 3,723 3,872 4,144 4,144 4,434

Inventories 9,722 10,818 11,310 11,438 12,147 12,147 11,917 12,334 12,827 13,725 13,725 14,688

Total Current Assets $208,456 $221,470 $234,946 $239,210 $247,474 $247,474 $262,753 $275,204 $288,486 $305,398 $305,398 $357,116

Property & Equipment, Net 11,801 11,552 11,863 11,664 11,084 11,084 10,504 9,924 9,344 8,764 8,764 6,444

Severance Pay Fund 3,342 3,407 3,493 3,134 3,047 3,047 2,962 2,879 2,799 2,721 2,721 2,430

Other Long Term Assets 560 611 642 603 1,365 1,365 1,365 1,365 1,365 1,365 1,365 1,365

Goodwill and Intangible Assets 36,476 35,517 34,555 33,599 32,628 32,628 32,503 32,378 32,253 32,128 32,128 31,628

Total Assets $260,635 $272,557 $285,499 $288,210 $295,598 $295,598 $310,087 $321,751 $334,246 $350,376 $350,376 $398,983

Liabilities and Equity

Account Payables $5,913 $4,331 $6,314 $5,844 $5,099 $5,099 $4,858 $5,442 $5,697 $6,330 $6,330 $6,566

Deferred Revenue and Other 47,295 49,782 52,765 51,337 47,277 47,277 53,486 55,359 57,573 61,603 61,603 65,925

Total Current Liabilities $53,208 $54,113 $59,079 $57,181 $52,376 $52,376 $58,344 $60,800 $63,270 $67,933 $67,933 $72,492

Long Term Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

LT Liabilities 22,437 23,373 23,180 22,533 23,901 23,901 23,234 22,585 21,955 21,342 21,342 19,057

Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0

Total Liabilities $75,645 $77,486 $82,259 $79,714 $76,277 $76,277 $81,578 $83,386 $85,225 $89,275 $89,275 $91,549

Stockholders Equity 184,990 195,071 203,240 208,496 219,321 219,321 228,509 238,365 249,021 261,100 261,100 307,434

Total Liabilities and Equity $260,635 $272,557 $285,499 $288,210 $295,598 $295,598 $310,087 $321,751 $334,246 $350,376 $350,376 $398,983


6

Radware Ltd.

Quarterly Consolidated Ratios



Profitability Ratios

Annualized Return On Equity 10.9% 12.5% 14.3% 15.0% 17.4% 14.0% 13.8% 14.3% 15.0% 16.5% 14.0% 13.4%

Annualized Return On Assets 7.7% 9.0% 10.2% 10.8% 12.9% 10.4% 10.2% 10.6% 11.2% 12.3% 10.4% 10.3%

Annualized Return On Net Assets 8.0% 9.3% 10.6% 11.3% 13.4% 10.8% 10.6% 11.1% 11.6% 12.8% 10.9% 10.7%

Efficiency Ratios

A/R Days Sales Outstanding 41.9 34.2 35.1 37.7 25.1 27.5 25.1 25.1 25.1 25.1 27.5 26.8

A/P Days Sales Outstanding 78.8 53.2 73.2 65.9 56.9 55.5 56.9 56.9 56.9 56.9 65.4 63.2

Inventory Turns 2.8 2.7 2.8 2.8 2.7 2.6 2.7 2.7 2.7 2.7 2.5 2.5

Days of Inventory 129.6 133.0 131.2 129.0 135.6 142.4 135.5 135.5 135.5 135.5 148.5 144.9

Liquidity Ratios

Current Ratio 3.9 4.1 4.0 4.2 4.7 4.7 4.5 4.5 4.6 4.5 4.5 4.9

Quick Ratio 3.7 3.9 3.8 4.0 4.5 4.5 4.3 4.3 4.4 4.3 4.3 4.7

Net Working Capital $155,248 $167,357 $175,867 $182,029 $195,098 $195,098 $204,409 $214,404 $225,215 $237,465 $237,465 $284,625

Per Share Data

Book Value Per Share $8.51 $8.47 $8.85 $9.15 $9.65 $9.64 $10.01 $10.39 $10.80 $11.27 $11.30 $13.50

Tangible Book Value Per Share 6.83 6.93 7.34 7.68 8.22 8.21 8.59 8.98 9.40 9.88 9.91 12.11

Net Cash Per Share 8.23 8.38 8.86 9.07 9.65 9.63 10.29 10.74 11.21 11.80 11.83 14.22


7

Radware Ltd.

Quarterly Consolidated Cash Flow Statement ($ in Thousands)



Cash Flow from Operations

Net Income $20,088 $6,118 $7,253 $7,796 $9,519 $30,686 $7,882 $8,550 $9,351 $10,773 $36,555 $41,110

(Inc.) Dec. in Accounts Receivable 60 1,879 (1,386) (1,611) 5,096 3,978 314 (429) (507) (923) (1,545) (990)

(Inc.) Dec. in Inventories 70 (1,096) (492) (128) (709) (2,425) 230 (417) (493) (898) (1,578) (963)

(Inc.) Dec. in Other Assets (468) 354 (934) 529 (172) (223) 27 (126) (149) (271) (519) (291)

Inc. (Dec.) in Accounts Payables 214 (1,582) 1,983 (470) (745) (814) (241) 584 255 633 1,231 236

Inc. (Dec.) in Other Current Liabilities 14,148 2,487 2,983 (1,428) (4,060) (18) 6,209 1,872 2,214 4,030 14,326 4,322

(Inc.) Dec. in Op. Working Capital $14,024 $2,042 $2,154 ($3,108) ($590) $498 $6,540 $1,485 $1,320 $2,571 $11,915 $2,315

Net Cash Flow from Operations $34,112 $8,160 $9,407 $4,688 $8,929 $31,184 $14,422 $10,034 $10,671 $13,344 $48,471 $43,425

Cash Flow from Investing Activities

Cap. Ex. (Net of D&A) (581) 249 (311) 199 580 717 580 580 580 580 2,320 2,320

(Inc.) Dec. in Other Long-Term Assets 1,862 843 845 1,354 296 3,338 210 208 205 203 826 791

Inc. (Dec.) in Other Long-Term Liabilities 1,856 936 (193) (647) 1,368 1,464 (667) (649) (630) (613) (2,559) (2,285)

Net Cash Flow from Investing $3,137 $2,028 $341 $906 $2,244 $5,519 $123 $139 $155 $170 $587 $826

Cash Flow from Financing Activities

Long-Term Debt Financing 0 0 0 0 0 0 0 0 0 0 0 0

Other Equity Activity 15,429 3,963 916 (2,540) 1,306 3,645 1,306 1,306 1,306 1,306 5,224 5,224

Net Cash Flow from Financing Activities$15,429 $3,963 $916 ($2,540) $1,306 $3,645 $1,306 $1,306 $1,306 $1,306 $5,224 $5,224

Beginning Cash Balance 126,111 178,789 192,940 203,604 206,658 178,789 219,137 234,988 246,467 258,599 219,137 273,419

Total Change in Cash 52,678 14,151 10,664 3,054 12,479 40,348 15,851 11,479 12,132 14,820 54,282 49,475

Ending Cash Balance $178,789 $192,940 $203,604 $206,658 $219,137 $219,137 $234,988 $246,467 $258,599 $273,419 $273,419 $322,894

Free Cash Flow $33,531 $8,409 $9,096 $4,887 $9,509 $31,901 $15,002 $10,614 $11,251 $13,924 $50,791 $45,745


8

Radware Ltd.

Supplemental Data ($ in Thousands)



Geographic Split (%)

Americas 28% 28% 27% 27% 27%

ROW 72% 72% 73% 73% 73%

APAC 41% 35% 36% 41% 36%

EMEA 31% 37% 37% 32% 37%

Geographic Split ($)

Americas $40,492 $10,813 $11,101 $11,393 $12,174

ROW 103,627 27,806 30,014 30,803 32,916

APAC 59,396 13,517 14,801 17,300 16,232

EMEA 44,231 14,289 15,213 13,503 16,683

Greographic Growth (%)

Americas

QoQ -7.7% 2.7% 2.6% 6.9%

YoY 36.3% 8.9% 5.1% 3.3% 3.9%

ROW

QoQ 1.7% 7.9% 2.6% 6.9%

YoY 30.8% 20.0% 21.8% 19.7% 20.4%

APAC

QoQ 1.8% 9.5% 16.9% -6.2%

YoY 38.2% 30.8% 7.8% 34.5% 18.7%

EMEA

QoQ 1.6% 6.5% -11.2% 23.6%

YoY 22.1% 30.8% 39.4% 4.9% 18.7%

Guidance

Revenue (in millions) $37.5-$38.5 $40.0-$41.0 $42.0-$43.0 $43.5-$45.0 $43.5-$44.5

Actual/Model $38.6 $41.1 $42.2 $45.1 $44.0

Gross Margin 81% 81% 81% 81% 82%

Actual/Model 81.0% 81.1% 81.1% 82.1% 82.0%

OpEx (in millions) $25.5-$25.8 $26.6-$26.7 $27.0-$27.5 $27.2-$27.7 $28.0-$28.5

Actual/Model $25.9 $27.0 $27.1 $28.1 $28.5

EPS $0.25-$0.27 $0.28-$0.32 $0.33-$0.35 $0.36-$0.38 $0.34-$0.36

Actual/Model $0.27 $0.32 $0.34 $0.42 $0.35

Enterprise Segment

Enterprise Revenue $104,087 $27,033 $28,369 $29,537 $30,661

% of Revenue 72% 70% 69% 70% 68%

QoQ Growth -1.1% 4.9% 4.1% 3.8%

YoY Growth 37% 13.4% 11.9% 7.1% 12.2%

Service Provider Segment

Service Provider Revenue $40,032 $11,586 $12,746 $12,659 $14,429

% of Revenue 28% 30% 31% 30% 32%

QoQ Growth -1.1% 10.0% -0.7% 14.0%

YoY Growth 23% 25.0% 29.3% 37.7% 23.2%


9

Investment Thesis

Radware remains well positioned in the Layer 4-7 application networking market and, in our opinion, is set to benefit from strength in its

core business as well as from its Alteon acquisition from Nortel at the end of March 2009. Alteon expands Radware's customer base and

channel presence, especially in North America, where Radware has struggled. With new products (VADI, Alteon refresh, etc.) and

partnerships and share gain opportunities, we see several growth drivers for Radware. We believe there's potential upside to our

estimates, and given secular growth trends in virtualization, the cloud and the service provider market, we recommend owning Radware.

Price Target Calculation

Our $36 price target represents ~19x our cash-adjusted 2012 EPS forecast of $1.42, a multiple that compares to Radware's peer group

of 18x; adding back net cash per share of $9.65 yields $36. Given secular growth trends and its attractive position in the Layer 4-7

application switching market and share gain potential (boosted by its Alteon acquisition and strong product cycle), we feel this multiple is

warranted despite Radware's smaller market share. The company's solid customer base and technological importance in the

next-generation virtualized data center could in theory make it an attractive potential acquisition target.

Key Risks to Price Target

In its carrier business, Radware sells to a small set of large customers. There is ongoing risk that a large customer could shift capex

priorities to Radware's detriment. Radware is at particular risk if expectations change for the application networking sector or the data

networking sector overall. Radware has made strategic acquisitions and is in the process of redefining its overall strategy. While

acquisitions can lead to accretion and incremental opportunities, we note M&A presents significant execution risk.

Important Disclosures and CertificationsAnalyst Certification - The author certifies that this research report accurately states his/her personal views about the

subject securities, which are reflected in the ratings as well as in the substance of this report.The author certifies that no

part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views

contained in this research report.

Potential Conflicts of Interest:

Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm

including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation

based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any

research analyst and any member of his or her household from executing trades in the securities of a company that such

research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an

officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in

covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long

position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in

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foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of

interest.

Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered byOppenheimer & Co. Inc:

Stock Prices as of February 1, 2012

Juniper Networks, Inc. (JNPR - Nasdaq, 20.93, PERFORM)F5 Networks (FFIV - Nasdaq, 119.74, OUTPERFORM)

10

8

16

24

32

40

48

2009 2010 2011 2012

04/20/09P:NA

11/13/09O:$31

04/20/10O:$34

07/14/10P:NA

10/19/10O:$36

01/06/11O:$43

02/24/11O:$46

07/26/11P:NA

Rating and Price Target History for: Juniper Networks, Inc. (JNPR) as of 01-31-2012


0

30

60

90

120

150

2009 2010 2011 2012

04/20/09O:$32

06/25/09O:$38

07/22/09O:$40

10/15/09P:NA

12/20/11O:$125

01/18/12O:$130

Rating and Price Target History for: F5 Networks (FFIV) as of 01-31-2012


11

0

10

20

30

40

50

2009 2010 2011 2012

02/10/09O:$8

07/27/09O:$11

09/29/09O:$15

12/28/09O:$17

02/02/10O:$19

03/30/10O:$25

07/27/10O:$26

09/07/10O:$30

09/27/10P:NA

02/10/11O:$46

04/28/11O:$43

07/26/11O:$42

08/19/11O:$34

Rating and Price Target History for: Radware Ltd. (RDWR) as of 01-31-2012


All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer &

Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price

histories, please write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017, Attention: Equity Research

Department, Business Manager.

Oppenheimer & Co. Inc. Rating System as of January 14th, 2008:

Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.

Perform (P) - Stock expected to perform in line with the S&P 500 within the next 12-18 months.

Underperform (U) - Stock expected to underperform the S&P 500 within the next 12-18 months.

Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential

conflict of interest.

Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008:

Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments,

and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector.

Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to

a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than

higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy,

aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere.

Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness

perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group.

12

Distribution of Ratings/IB Services Firmwide

IB Serv/Past 12 Mos.

Rating Count Percent Count Percent

OUTPERFORM [O] 340 56.70 149 43.82

PERFORM [P] 253 42.20 85 33.60

UNDERPERFORM [U] 7 1.20 4 57.14

Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not

correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned

buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.

Company Specific DisclosuresOppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3

months from RDWR.

In the past 12 months Oppenheimer & Co. Inc. or an affiliate has received compensation for non-investment banking

services from RDWR.

In the past 12 months Oppenheimer & Co. Inc. has provided non-investment banking, securities-related services for

RDWR.

Oppenheimer & Co. Inc. makes a market in the securities of RDWR and FFIV.

Additional Information Available

Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017,

Attention: Equity Research Department, Business Manager.

Other DisclosuresThis report is issued and approved for distribution by Oppenheimer & Co. Inc. Oppenheimer & Co. Inc transacts Business on all Principal

Exchanges and Member SIPC. This report is provided, for informational purposes only, to institutional and retail investor clients of

Oppenheimer & Co. Inc. and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction

where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors.

This report does not take into account the investment objectives, financial situation or specific needs of any particular client of

Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not

rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the

merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to

act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in

this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs,

objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and

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13

encourage investors to seek the advice of a financial advisor.Oppenheimer & Co. Inc. will not treat non-client recipients as its clients

solely by virtue of their receiving this report.Past performance is not a guarantee of future results, and no representation or warranty,

express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned

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statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report

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in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with

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This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc.

Copyright © Oppenheimer & Co. Inc. 2012.

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