Big Changes Seen in FireEye Upside After Earnings and Guidance

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FireEye Inc. (NASDAQ: FEYE) traded lower on Friday despite a broader market rally. The drop was after earnings, and things got cautious enough that FireEye shares hit a new 52-week low.

24/7 Wall St. has already covered earnings in detail, but we wanted to see what has happened with some of the key analyst calls behind what was a massive growth story in prior quarters. One force driving the caution here is not just excessive valuations. FireEye was already expected to keep posting a per share loss in 2016 and also in 2017.

FireEye reported a net loss of $0.36 per share on $184.8 million in revenue. Thomson Reuters was calling for a net loss of $0.37 per share on revenue of $185.30 million. The same period from the previous year had a net loss of $0.38 per share on $142.98 million in revenue.

What really mattered here was FireEye’s guidance and bookings. This is creating a much more cautious or modest valuation range from analysts. The company expects to see a net loss of $0.49 to $0.53 per share, total revenue in the range of $167 million to $177 million, and billings in the range of $163 million to $183 million. The consensus estimates call for a net loss of $0.40 per share on $167.87 million in revenue.


24/7 Wall St. wanted to take a closer look at how analysts are treating what is supposed to be one of the top newer cybersecurity firms in America. Not all the ratings are negative, but the price targets are almost unilaterally lower than what was expected before earnings.

D. A. Davidson still had a Buy rating and appears to have only lowered its target price to $42 from $51.

Bank of America Merrill Lynch has a Neutral rating but it maintained a $23 price objective for FireEye. The firm said that FireEye launched new products this quarter to help revive product billings, which were down 2% from a year ago, but it noted that this could take some time before investors should expect any real contribution.

S&P Capital IQ has one of the more cautious Sell ratings on FireEye. It sees high valuations and potential problems in the growth model.

Other key analyst calls with price target changes were seen as follows:

  • Barclays has an Equal Weight rating but lowered its price target to $18 from $21.
  • Citigroup had a Buy rating but cut its price target to $24 from $35.
  • Cowen maintained a Market Perform rating but lowered its price target to $18 from $30.
  • Deutsche Bank has a Hold rating but lowered its price target to $15 from $20.
  • Nomura Securities still has an official Buy rating but lowered its price target to $30 from $35.
  • Oppenheimer had an Outperform rating but lowered its price target to $35 from $39.
  • Piper Jaffray has only a Neutral rating, and it lowered its price target to $15 from $19.
  • UBS has a Neutral rating but cut its price target to $13 from $17.
  • Wedbush Securities is at Neutral and cut its target price to $17 from $18.

FireEye shares closed down 3.3% at $12.00 on Friday, with total volume of 12.5 million shares, more than doubling the normal 5.4 million shares. Its new 52-week range is $11.35 to $55.33. FireEye still has a market cap of $1.9 billion.

It is one thing to have a high price-to-earnings (P/E) ratio. It is another thing when every product you sell goes out the door at a loss and is expected to remain that way for more than just the current year. A cautious investing climate just is not very excited to reward companies that insist on losing money.