FireEye: Color on Qtr
- FBR Capital notes it is downgrading shares of FireEye from Outperform to Market Perform. While firm (and many on the Street) have been patient during this roller coaster ride over the past 18 months, it appears DeWalt and the FireEye growth story have run into a brick wall as evidenced by the soft 3Q15 performance/4Q15 outlook. Although FireEye delivered 45% top-line growth and is still seeing relatively healthy deal flow, it appears FireEye is seeing a number of company-specific execution issues, and product issues are slowing down growth prospects heading into 2016 despite massive cybersecurity tailwinds. Firm incorrectly believed that FireEye would be able to successfully integrate Mandiant into the fold but it was proven wrong last night. Firm lowers tgt from $53 to $28.
- Wunderlich Securities notes FEYE CEO Dave Dewalt introduced a significant "Sea Change" to the industry as customers have stopped their "EMERGENCY" spending on security and are trending back to more normalized industry spending levels. FEYE was significantly impacted more than its peers in EMEA, which came in short of expectations. FEYE also had achange in revenue recognition for its email product that affected 3Q results. Despite a significant decrease in firm's tgt to $32 from $62, it is maintaining Buy rating on FEYE. We expect that a estimated 30%+ revenue growth in FY16 combined with expected operating margin expansion garners a market multiple that is in line with industry peers.
- Stifel Research notes FEYE reported 3Q15 results that fell short of expectations across both revenue and billings. Firm's concerns following Cyber Defense Summit were largely founded as the combination of a tough government compare and European weakness ultimately drove both a sizable miss and a meaningful reduction to the forward outlook. Stifel continues to see FEYE benefiting from both a best-of-breed incident response offering (Mandiant) and FireEye-as-a-Service, both of which grew more than 50% y/y. New CFO has a clear focus on cash flow generation and conservative forward outlooks with incremental cushion. Maintain Buy Rating: but is lowering target price to $45 from $55.
- Topeka Capital notes it is reiterating Buy rating while lowering the PT to $40 from $56 to reflect; 1) disappointing 3Q billings; 2) a lowering of full year 2015 revenue and billings guidance, and 3) a more conservative valuation given the new financial metrics. For those "glass half full" investors, FEYE did take another positive step toward reaching profitability over the next few years. FEYE needs to fix EMEA to get back on track.
- D.A. Davidson notes it is reiterating a Buy rating and $51 tgt. Billings miss guidance, primarily driven by weakness in Europe, a shorter average contract length in the United States (resulting from a tough compare with a 5 year, 8-figure deal in 3Q14), and a lower average deal size in large enterprise transactions. FEYE added 299 new customers in 3Q15 (compared to 256 in 3Q14) bringing the cumulative customer count to 3,999. Large enterprise deals (>$1 million) increased 31% YoY. Customer renewal rates remained above 90%, and management also noted that competitive win rates remain "extraordinarily high". Management noted that following 18 months of elevated or ‘emergency' spending, customers are taking a more strategic approach to upgrading security infrastructure.