6 Analysts Commenting On FireEye After Meeting With Management

FireEye Inc FEYE held an Analyst Day presentation on Wednesday. Here are what six of Wall Street's top analysts are saying.

Morgan Stanley: Still In The Early Days

Melissa Gorham commented in a note that FireEye's Analyst Day presentation highlighted the company's success in combining its various products and services, which could yield a 30 percent growth through 2019.

However, the analyst noted that management's targets of achieving positive operating cash flow in two to four years and 20 to 25 percent operating income in three to five years won't be easy. The company would need to see its expenses growth "well underpacing" top-line growth for the next five years.

With many products in the early stage (FireEye as a Service, Endpoint Security, Threat Analytics) the analyst suggested the company will only see break-even operating margins in three to five years, assuming the company achieves a 35 percent revenue growth and see sales productivity improve.

Shares remain Equal-weight rated with an unchanged $37 price target.

FBR: Company's Financial Objectives Are Attainable

Daniel Ives commented in a note that he left FireEye's Analyst Day presentation "incrementally positive" around the company's opportunities and expressed optimism in its longer-term financial objectives.

Ives noted that the company's 20 percent to 25 percent operating margin objective is attainable given his believe that there is leverage in the company's model as it signs larger deal sizes, penetrates further into existing customers and increases its recurring revenue contribution.

However, Ives did state that FireEye still has "a lot of wood left to c hop" as it looks to lower its R&D and sales and marketing expenses while at the same time focusing on new/updated product launches and increase market awareness at the same time. Nevertheless, the company "continues to make steps in the right direction."

Shares remain Outperform rated with an unchanged $53 price target.

Related Link: FireEye Unveils Visa Collaboration; Sees Positive Cash Flow By Mid-FY16

UBS: FireEye Getting Stronger And Remains Differentiated

Brent Thill commented in a note that FireEye reiterated its "well-understood" drivers of growth and discussed its "strengthening" competitive moat, broadening platform and pathway towards profitability.

Thill added that "most notably," FireEye's "unique" partnerships – such as the recently announced agreement with Visa Inc V shows the company's ability to benefit in the form of extended sales capacity, lead generation, and a more fluid path to the internationalization. The analyst also noted that these kinds of agreements "remain underappreciated" by investors.

Bottom line, FireEye remains "well-positioned" to sustain its current growth trajectory and do so "considerably" more profitability than its peers as the company continues to scale.

Deutsche Bank: FireEye's Guidance Isn't A ‘Heroic Assumption'

Karl Keirstead commented in a note that FireEye's 2019 guidance isn't a "heroic assumption" and assumes a growth rate that is already reflected in the stock's price.

Keirstead noted that the company's $2 billion in billions in 2019 represents only a 26 percent compounded annual growth rate. Given billings growth of 53 percent in the first quarter and guidance for 41 percent growth through 2015, the growth rate through 2019 should be achievable.

Nevertheless, the analyst did state that FireEye's "high confidence" in its growth through 2018 could be interpreted by the investment community as a "modest positive."

Shares remain Hold rated with an unchanged $44 price target.

Gabelli: Focus On Debt Raises

Hendi Susanto commented in a note FireEye's ability to raise "sizable" convertible notes at low interest rates adds to its ability to reach financial objectives.

FireEye issued new Convertible Notes on June 2 and obtained net cash proceeds of $746 million and $150 million of prepaid forward share purchase.

FireEye is aiming a positive operating cash flow between 2016 and 2018. According to Susanto's models, FireEye should generate positive operating cash flow in 2017 and positive free cash flow in 2018. As such, the company's "strong" cash on hand mitigates the concerns on the cash burn and negative free cash flow on its path toward profitability.

Shares remain Hold rated with no assigned price target.

Nomura: FireEye Did A ‘Good Job'

Rick Sherlund commented in a brief note that FireEye did a "good job" of highlighting its expertise in the "fast growth" cybersecurity market and its growing product and services offerings.

Shares remain Buy rated with a price target raised to $54 from a previous $48.