FireEye Inc Is In Strong Standing; Oppenheimer Reiterates Upbeat View

Oppenheimer's Shaul; Eyal sees more profitability ahead for FEYE after a historically good quarterly performance.


On days like today, when the entire stock market is under pressure, you must have done something right to see your stock rise 5%. And FireEye Inc (NASDAQ:FEYE) definitely did something right

FireEye investors are smiling today after the security technology player danced to its goal: a path to profitability. The company’s standout fourth quarter results have since sent shares on a 7% vault today.

Oppenheimer analyst Shaul Eyal weighs in on a “record-breaking” quarterly show acknowledging “broad-based strength” from the bullish camp, thrilled to see moving steam in the endpoint market.

In reaction, the analyst reiterates an Outperform rating on FEYE stock with a $22 price target, which implies a 45% upside from current levels. (To watch Eyal’s track record, click here)

For the fourth quarter, the tech firm experienced a 9.5% year-over-year rise in revenues to $202.3 million, surpassing the Street’s expectations of $193.7 million as well as its own guide of $190 to $196 million. Billings also yielded a beat against the Street’s $221 million forecast, bringing in a 9% year-over-year surge to $242 million. Even operating margins of 1% served up an outclass compared to consensus of 0.4%.

On back of a slew of improvements to the company’s Endpoint platform last year, the analyst sees the print as an exhibit that “investments as the products are beginning to pay off.” For the fourth quarter, 80% of the company’s new Endpoint customers deployed Cloud HX, which the analyst attributes as a main source of FEYE’s product subscription gains. To put it bluntly, “We believe FEYE is picking up momentum in the endpoint market.”

Product sales also flashed strength, soaring 14% year-over-year to $38.3 million over the Street’s $29.5 million. The company booked 52 customers past $1 million, a nice rise from the period in the year before which saw 34 customers, and 2 customers over $5 million. Total Subscription and Services climbed 8.5% year-over-year to 4164 million, aligning with consensus of $164.1 million. For the quarter, Helix secured another 116 new customers, growing from 57 in the quarter before.

Eyal notes, “FEYE reported strong 4Q17 results exceeding on revenue, EPS, billings and cash flow metrics. The strong performance was driven by 1) improved execution across all product lines and geographies (EMEA shined), 2) FEYE’s Helix platform experiencing strong traction with 116 new customers booked during 4Q (double its 3Q count) as the platform’s automation capabilities resonate well with customers and 3) FEYE’s end-point solutions finding a ripe adoption environment as its Enterprise Protection Platform (EPP) covers not only Windows but iOS and Android operating systems as well. FEYE’s elevated FY18 outlook (~10% YoY revenue growth) is supported by improved billings levels and we believe the company remains well positioned as FY18 unfolds.”

Overall, “The product and execution focus yield an outcome sustaining a long-term high-single-digit growth rate coupled with profitability and improved predictability,” contends the analyst.

TipRanks highlights a mostly bullish analyst consensus backing the security technology vendor’s prospects. Based on 6 analysts polled in the last 3 months, 4 rate a Buy on FEYE stock while 2 maintain a Hold. The 12-month average price target stands at $20.17, marking a nearly 34% upside from where the stock is currently trading.