UPDATE: Citigroup Initiates Coverage on FireEye
Share of FireEye (NASDAQ: FEYE) are down 7.8 percent, adding to significant losses incurred over the past month. Citigroup initiated coverage on Friday morning with a Neutral rating and $60 price target.
Citi believes FireEye “can maintain hyper-growth status over the next 10 years, with long-term revenue growth of 30%, but also achieving 27% terminal op margins.”
The firm sees a conflict between long-cycle valuations and short-cycle valuations. While FireEye is the “undisputed leader in advanced persistent threat mitigation,” new threats and technologies may initiate a new short-cycle in the security market.
The idea of FireEye being acquired was shut down by Citi because at “a $9B market cap, few large tech companies have the resources to buy FEYE or stomach the valuation.”
Citi believes FireEye will eventually have to “transition from a point product vendor in an undefined market category (APT mitigation) to competing more directly in mainstream product categories (firewall, email security, secure web gateway) where the bulk of security budget lives.”
Shares of FireEye are down a massive 47 percent from the all-time high of $97.35 set in early March.
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