Risk/Reward Remains Favorable In FireEye Ahead Of Q4 Results

FireEye Inc FEYE is scheduled to report its Q4 results on Thursday. While saying FireEye will likely report in-line revenue and EPS, DA Davidson’s Jack Andrews mentioned in a report that the company had made significant progress in transforming its business.

Andrews maintained a Buy rating on the company, with a price target of $18. He added that the stock’s risk/reward seemed “favorable at current levels,” given that the security software spending backdrop was “generally healthy.”

Q4 Preview

Andrews expect FireEye to report revenue at $190.9 million, in-line with the consensus estimate of $191 million, representing 3.3 percent year-over-year growth. Non-GAAP EPS could come in at $(0.16), in-line with Street expectations.

The analyst forecasted a decline in billings of ~7 percent year-over-year to $237.8 million, within the company’s guidance of $230-$250 million.

“Our attendance at FEYE's user conference during 4Q left us incrementally encouraged with the progress FEYE is making to transform its business,” Andrews wrote. He said FireEye’s new platform, Helix, was impressive and brought together ~30 separate products of the company under a single user interface, with the aim of “addressing accurate detection and alerts, and accelerated response via automation.”

Favorable Risk/Reward

Recent discussions with investors had indicated that the overall sentiment on the stock continued to be “negatively skewed,” the analyst mentioned. He noted that while most software companies needed to announce beat and raise quarters for their share prices to appreciate, FireEye just needs to deliver on its announced forecasts for the stock to move materially higher.