Deutsche Bank Offers Takeaways Following Meeting With FireEye CFO

• FireEye Inc FEYE shares have plunged 50 percent in the last three months, declining after hitting a high of $43.96 on August 11.
• Deutsche Bank’s Karl Keirstead maintained a Hold rating on the company, with a price target of $30.
• The meeting with the CFO highlighted reasons for weakness in Europe, and that tighter cost control was aimed at boosting margins and FCF, Keirstead mentioned.

FireEye’s shares dipped 20 percent last week, versus the S&P 500 remaining flat, after the company reported disappointing 3Q15 results last week and guided to an 18 decline in billings growth and 10 percent product license revenue growth in 4Q15.

Analyst Karl Keirstead said that a meeting with FireEye’s CFO and head of IR, Mike Berry, highlighted weakness in Europe and tighter cost control being taken to boost margins and FCF.

FireEye indicated that softness in Europe was due to a combination of “less buyer urgency and poor sales execution.” The company also indicated that maintenance renewals were not steady and there were lower durations and smaller deal sizes. “FEYE downplayed the impact of competition and barely flagged the license-to-subscription mix shift,” Keirstead wrote.

“On a positive note, the CFO flagged the potential for much greater cost control (moving R&D offshore, greater sales efficiency by better using the channel, G&A control) and possibly a conservative 4Q15 guide (CFO said he discounts the likelihood of large deals closing when setting guide),” the Deutsche Bank report stated.