Why Analysts Feel Blind-Sided by FireEye

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FireEye Inc. (NASDAQ: FEYE) reported its most recent earnings results after the markets closed on Thursday, and it was not pretty. After the report, shares hit a new all-time low for the stock, despite actually posting gains until Thursday’s report. Analysts took this an opportunity to weigh in on the stock.

24/7 Wall St. has included some highlights from the earnings report, as well as what a few key analysts said after the fact.

The company posted a net loss of $0.03 per share and $184.7 million in revenue. Consensus estimates from Thomson Reuters that called for a net loss of $0.16 per share and $191 million in revenue.

Billings of $221.8 million were down 14% from the report a year earlier, and the non-GAAP gross margin of 74% is down from 75%. The non-GAAP operating margin of −1% was versus −28% a year earlier.

For the first quarter of 2017, FireEye currently expects total revenues of $160 million to $166 million, with billings in the range of $130 million to $150 million. It also sees an adjusted net loss per share of $0.26 to $0.28 and cash flow from operations of −$30 million to −$40 million. Analysts were looking for a net loss of $0.24 per share and $176.6 million in revenue.

Merrill Lynch reiterated a Neutral rating. The firm further commented:

Weak results and guidance, CFO leaving, but some light at end of the tunnel. … FEYE reported weak 4Q results, with billings/revenue of $221.8mn/$184.7mn versus our $240mn/$193.8mn estimates; CFO departing. Guidance for 1Q17 was also weak, with mgmt. expecting roughly $140mn in billings, down 25% YoY, and well below our $191mn. Positively, mgmt. guided for YoY organic growth in 2H and expects to reach positive op. margins by 4Q17.

A few other analysts weighed in on FireEye as well:

  • Deutsche Bank lowered its price target to $13 from $15.
  • BMO has a Market Perform rating and lowered its target to $11 from $13.
  • Stifel cut its price target to $17 from $20.
  • UBS lowered its price target to $13 from $14.
  • Citigroup lowered its price target from $15 to $12.
  • Oppenheimer has an Outperform rating but lowered its target to $23 from $28.
  • Evercore ISI slashed its price target to $14 from $26.
  • Goldman Sachs lowered its price target to $10 from $11.
  • Morgan Stanley lowered its price target from $15 to $11.
  • Cowen has a Market Perform rating and lowered its target to $13 from $15.

Shares of FireEye closed Friday at $10.93, with a consensus analyst price target of $16.58 and a 52-week trading range of $10.60 to $19.63.