Analysts at Morgan Stanley see an upside scenario of 100 percent for FireEye Inc FEYE as the company's recent earnings reports show a stabilization in the business. The firm's Melissa Franchi upgrades FireEye's stock rating from Equal Weight to Overweight with a price target boosted from $13 to $19.
FireEye's bullish outlook is based on the company's ability to shift itself from a "best of breed appliance-based sandboxing) towards a "leading cybersecurity vendor," Franchi explained. The new Helix solution will help in the transformation as it makes the company a "one-stop shop" and addresses the core secular trend of consolidation inside the sector.
Early data readouts from a customer survey conducted by the Morgan Stanley team are encouraging, Franchi noted. In fact, adoption levels of Helix are happening at a significantly higher rate than the Street assumes. Specifically, while just 13 percent of those surveyed use Helix today, the survey also found this number will rise to 55 percent within the next three to five years.
Helix is now expected to be the most widely used solution within the time frame, the analyst added. On top of that, FireEye will benefit from cross-selling opportunities as 53 percent of respondents will add an additional subscription such as Cloud MVX and 56 percent of Helix users will also use FireEye-as-a-Service.
Finally, under a bull-case scenario, shares of FireEye have upside to $33 per share, the analyst stated. Under this scenario, the company will once again boast a revenue growth rate of at least 20 percent in 2018 and sustain at least a 15 percent growth rate through 2022, at which point operating margins reaches at least 20 percent.
At time of publication, shares of FireEye were up 6.9 percent at $15.80.
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