Market Overview

JPMorgan: FireEye Can Double In Price

FireEye to Announce Q4, FY 2013 Results on February 11, 2014, After the Market Close
  • FireEye Inc (NASDAQ: FEYE) shares have been on a downturn for six months, and have lost 68 percent since July 21.
  • JPMorgan’s Sterling Auty maintained an Overweight rating for the company, with a price target of $30.
  • The company has taken a big step in the right direction, beating 4Q15 billings and making a strategic acquisition, Auty stated.

The negative sentiment for the stock had reached “excessive proportions,” with many investors expecting another billings miss and a significant reduction in the outlook, analyst Sterling Auty mentioned.

FireEye is now expected to report 4Q15 billings of $256-$257M, which is at the higher end of the previous guidance of $240-$260M. Revenue is expected at $184-$185M, versus the prior guidance of $182-$190M.

“Strong billings results seemed to benefit from the start of a recovery in Europe in addition to the strong uptake of FaaS (FireEye as a Service) through partners like HP and Singtel from the partner ecosystem that are ramping up their efforts,” Auty wrote.

FireEye projected positive operating cash flow of $7-$9M for 4Q15, translating to $35-$37M CFO for FY15. This means that the company can use cash on its balance sheet for various opportunities, including the acquisition of iSight Partners, the analyst mentioned.

In the report JPMorgan noted, “The acquisition brings attacker based intelligence capabilities to FEYE, which nicely complements the Mandiant capabilities the company already had on its platform. The solution is easily sold through partners and resellers, which should help FEYE repair some of the channel conflict issues and expand its market as this intelligence solution does not have many competitors offering similar solutions in the market.”

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