Market Overview

FireEye's Q4 Was Disappointing 'On Multiple Fronts,' But Valuation Is Already Distressed

FireEye's Q4 Was Disappointing 'On Multiple Fronts,' But Valuation Is Already Distressed

Jack Andrews of D.A. Davidson reiterated his Buy rating on FireEye Inc (NASDAQ: FEYE) despite the cybersecurity firm reporting a disappointing quarter on many fronts and issued a weak first-quarter guide for billings. Shares of FireEye fell to an all-time low on the recent weakness in fundamentals.

Disappointing Quarter

FireEye’s fourth-quarter billings came in at $222 million, missing Street's $240 million estimate, as large deals failed to close at the end of the quarter reflecting lack of sales leadership in international markets and lower sales capacity.

The company projects first-quarter revenue of $160 million -$166 million, lower than the consensus estimate of $176.6 million.

FireEye expects first-quarter billings, a closely watched indicator of future business, in the range of $130 million to $150 million, also well below the average estimate of $186.3 million.

Justification For Bullish Stance

However, Andrews pointed out to the distressed valuation, following 16 percent plus plunge in the shares following the results, and encouraging initial response for Helix platform as positives.

Since its introduction in November, more than 250 customers and prospects have now signed up for Helix.

“Given the nature of the product, we believe Helix positions FEYE well regarding the key theme in security in our view — vendor consolidation,” Andrews wrote in a note.

“While FEYE remains very much a transition story, for investors with a longer-term view who can tolerate volatility, we believe risk/reward is favorable at current levels,” Andrews added.

At last check, shares of FireEye dropped 16.35 percent to $10.85 after setting a new 52-week low of $10.60. Andrews has a price target of $18.


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