FireEye Investors Respond To M&A And Guidance, But Is The Street Convinced?

On Wednesday, FireEye Inc. (NASDAQ: FEYE) released preliminary 4Q15 earnings and announced that it will acquire iSight Partners for $200 million in cash.

"This acquisition extends FireEye's intelligence lead with an offering no one else in the industry can match," FireEye CEO David DeWalt said in a statement. "Forward-looking security organizations -- from governments to the private sector -- know threat intelligence is the key to establishing a robust security posture tuned for the threats targeting each organization."

Several Wall Street firms recently gave their opinion on FireEye following the announcements.

Citi: Walter Pritchard and James Fish rate FireEye as a Buy with a $35 price target.

“FEYE announced preliminary Q4 earnings which we view as positive, especially given significant uncertainty in the market....Mgmt guided FY16 billings to 20%+ organic with iSight incremental and positive FCF for the year...The year will be more back-end loaded, something that appears to come mostly from tougher 1H comps."

Stifel: Gur Talpaz and Christopher Speros rate FireEye as a Buy while a price target is unavailable.

“We like the acquisition as we continue to see cyber-defense evolving...In the near-term, we believe that feeding iSIGHT’s intelligence into FireEye’s existing products should improve their overall efficacy and reduce already low false-positive rates.”

JMP Securities

“We believe iSight will bolster FireEye’s position as the premier name for high-end security accounts, but we are not confident that it will enable FireEye to expand down market, which is critical for the company to sustain its long-term growth...However, while we like the acquisition...we remain concerned that it is a premium priced security solution provider that is struggling to defend its installed base…”

FBR & Co. Daniel Ives rate FireEye as Market Perform while a price target is unavailable.
“The deal is expected to be modestly accretive to 2016 operating income/cash flow, and we believe iSIGHT’s actionable threat solutions could have synergies with existing intelligence/analystics solutions...We believe investors will cheer the company’s solid billings performance.”

Barclays: Saket Kalia rates FireEye as Equal Weight and lowered their price target to $21.

“Acquisition of iSIGHT adds more threat intelligence...our billings estimates are going up given the out-performance this quarter and because we include iSIGHT.”

Summit: Srini Nandury rates FireEye as a Buy with a $35 price target.

"FEYE’s solutions, though expensive, remain the gold standard to intercept and remediate APTs...We believe the company is a great acquisition candidate to any number of players in the space.”

Currently, FireEye is trading at $15.47, up 4.03 percent.