FireEye (FEYE): Disappointing 2Q16 Results But A Takeout Candidate - Oppenheimer
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Oppenheimer analyst, Shaul Eyal, reiterated his Outperform rating on shares of FireEye, Inc (NASDAQ: FEYE) after FEYE reported disappointing 2Q16 results. The company came short of consensus revenues impacted by a changing threat environment and sales execution issues—but beat the Street's EPS as the company remains focused on its path to profitability (which the company reiterated would occur in 4Q17).
Guidance was reduced to reflect the shorter duration of security consulting services and lower sales team productivity due to restructuring. The quarter saw strength in large deals (40 transactions over $1 million vs. 30 in 2Q15) driven by multiproduct attach rates and strength of the Endpoint platform (HX).
The analyst believes FEYE has embarked on a restructuring plan aimed at lowering 9% of its headcount (~300-400 employees) which is included in its updated guidance and believes that FEYE is a takeout candidate. He went on to state "Despite a weak quarter, we continue to see potential for FEYE's cloud-based MVX engine (expected to finish polishing by late August) while keeping in mind the recent consolidation activity in the security industry for cloudbased solutions (Blue Coat, CloudLock, Ping Identity)".
The price target of $33 is cut from $35 reflecting 5.4x EV/FY18 revenue.
Shares of FireEye, Inc closed at $16.75 yesterday.
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