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Set Up Into FireEye's Earnings Report 'Remains Attractive'

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Oppenheimer said the positive momentum on FireEye Inc FEYE 3.25% remains intact and the setup to first quarter results on Thursday "remains attractive."

Wall Street analysts expect the cybersecurity software solutions provider to report a loss of $(0.50) a share and revenue of $171.82 million.

"Based on our recent channel checks (20 VARs) we expect FEYE to deliver solid 1Q16 results, coming at least in line with its mid-point revenue guidance of $172M (up 37% YoY)," analyst Shaul Eyal wrote in a note.

According to Eyal, the results would benefit from continued traction of FaaS (billing run rate of over $100 million) and solid security spending in the first quarter as seen by recent results from Fortinet Inc FTNT 2.16%, Barracuda Networks Inc CUDA 2.46%, Proofpoint Inc PFPT 2.2% and Check Point Software Technologies Ltd. CHKP 0.76%.

Further, since Fortinet and Check Point reported strong first quarter EMEA results, the analyst expects similar trends to be realized by FEYE.

"We believe FEYE is quickly responding to evolving industry requirements (e.g., debut of Mandiant services for law firms following Panama Papers breach) while developing a product line that rides the wave of security efficacy and automation," Eyal highlighted.

Eyal, who maintained his Outperform rating on FireEye, said the company could continue and enhance its focus on improved profitability as it serves a growing total available market, which Gartner predicts to touch $100 billion in FY19.

"We view our LPS estimates for FY16 ($1.24) and FY17 ($0.25) as highly feasible targets with room for further improvement driven by better volumes and internal efficiencies," Eyal added.

Eyal, who has a price target of $35 on the stock, see the risk/reward balance on shares clearly shifting toward reward.

Mar 2016Goldman SachsInitiates Coverage onNeutral
Mar 2016UBSMaintainsNeutral
Mar 2016BarclaysMaintainsEqual-weight

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