MorningStar Issues Research Report on FireEye Inc (NASDAQ:FEYE) Here’s the Scoop

Equity Analysts Peter Wahlstrom and Ilya Kundozerov of Investment Research Firm Morningstar issued a research report and buy rating on FireEye Inc (NASDAQ:FEYE) titled ”This virtual network sandbox pioneer’s purchase of Mandiant made it a leader in the EDR market on September 29.

The report states ”As one of the largest EDR vendors, FireEye has managed to leverage its Mandiant business into a stream of positive press coverage almost every time a high-profile hack occurred. In the relatively anonymous world of technology security, we believe this strategy is helping to establish FireEye as a premier brand in the EDR market and the firm’s rapid growth seems to bear this out. Nevertheless, we believe convergence in the EDR and EPP markets over the next few years will yield a few casualties, although it is more likely than not that the current EDR market leaders will make attractive acquisition targets for the legacy EPP vendors.

In the meantime, we expect the white-hot revenue growth at FireEye to decelerate, as the company’s technology edge is blunted by competitors, although its Mandiant consulting and response business will remain strong. Management continues to invest for growth, so profitability is not a near-term consideration, in our opinion.

FireEye Inc (NASDAQ:FEYE) has invented a purpose-built, virtual machine-based security platform that provides real-time threat protection to enterprises and governments worldwide against the next generation of cyber attacks. These highly sophisticated cyber attacks easily circumvent traditional signature-based defenses, such as next-generation firewalls, IPS, anti-virus, and gateways.

The FireEye Threat Prevention Platform provides real-time, dynamic threat protection without the use of signatures to protect an organization across the primary threat vectors and across the different stages of an attack life cycle. The core of the FireEye platform is a virtual execution engine, complemented by dynamic threat intelligence, to identify and block cyber attacks in real time. FireEye has over 3,700 customers across 67 countries, including over 675 of the Forbes Global 2000.

The report concluded that ”Overall this was a solid quarter for FireEye as revenue growth remained impressive, even if it continues to decelerate from previous nosebleed levels. The firm is still navigating its transition from its virtual sandbox technology leadership role to a broader portfolio of security products and services, but the sudden departure of its CFO gives us some pause. Ultimately, we suspect Sheridan’s departure is not indicative of any trouble at FireEye, but may still cause a disruption at the firm.

On September 8 FEYE announced ”industry veteran Michael Berry has been appointed senior vice president and chief financial officer. Berry, who will report to FireEye CEO and Chairman David DeWalt, is expected to join the company on September 21.

Berry has held a number of senior finance positions in the technology industry, most recently serving as executive vice president and chief financial officer of Informatica Corporation, the world’s leading independent provider of enterprise data integration software and services. Berry oversaw finance, investor relations, information technology and legal for Informatica, which reported revenues of $1.05 billion in 2014.

FireEye also announced that Deepak Ahuja, Tesla’s first CFO, has joined the FireEye board of directors. Ahuja has overseen finance at Telsa while it emerged as a leader in accelerating the world’s transition to sustainable transport. Prior to joining Tesla, Ahuja had 15 years of global automotive finance experience at Ford, where he held various leadership positions. In 2014, Ahuja was named Bay Area CFO of the Year among large public companies by San Francisco Business Times, and he was named CFO of the Year among small public companies by Silicon Valley Business Journal in 2010.


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