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FireEye's Q2 Keeps Growth Story Intact

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FireEye's Q2 Keeps Growth Story Intact

FireEye Inc (NASDAQ: FEYE) impressed investors Tuesday, reporting a second-quarter earnings beat and strong guidance.

EPS came in at a $0.04 loss with sales totaling $185.5 million, compared to the Street’s $0.12 loss and $176.43 million estimates.

The company also expects Q3 to be in line with consensus, but sees EPS and sales for the year both ahead of estimates.

The stock opened Wednesday over 7 percent, just below $16, but had lost all its gains by 10:30 a.m. ET.

FireEye’s Turnaround ‘Off To A Good Start’

Oppenheimer analyst Shaul Eyal reiterated an Outperform rating and $23 price target on FireEye.

“We believe [FireEye]'s turnaround strategy is off to a good start, and multiple near-term drivers could contribute to [FireEye]'s continued strong cadence in 2017,” said Eyal.

Among the highlights from the earnings report were product sales, professional services and total subscription and services, all of which beat the Street’s estimates.

Product sales came in ahead by over $5 million at $31.2 million. However, it was still down 23.5 percent year over year.

Professional services reported a record quarter, growing 19.4 percent to $33.7 million, and total subscription and services grew by 15 percent to $154.3 million.

“[FireEye is] altering its go-to-market strategy and channel engagement to offer its simplified security solutions to a broader audience,” said Eyal.

The company has typically been a “premium” vendor, but Eyal believes it has the potential to capture the small and midsize business market.

Deutsche Bank’s Likes And Dislikes

Deutsche Bank’s Karl Keirstead has a less optimistic view for the company, reiterated a Hold rating and $15 price target.

The analyst also saw the Q2 results as a “step in the right direction” and liked management’s optimistic tone.

However, Keirstead is wary of the pricing review announced by management, saying that price points are “poised to drop.”

“The risk is that lower pricing also impacts the core appliance business, as [FireEye] is not anticipating price pressure in its [second half] guide,” said Keirstead.

The analyst also noted declining new customer additions, and believes that the company’s transformation poses significant risk on both sides.

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Latest Ratings for FEYE

DateFirmActionFromTo
Aug 2019Initiates Coverage OnBuy
Jul 2019MaintainsNeutral
May 2019AssumesNeutral

View More Analyst Ratings for FEYE
View the Latest Analyst Ratings

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