Don't Expect Any Heroics Out Of FireEye's Q3

D.A. Davidson says investors should not expect “any heroics” from FireEye Inc FEYE’s third quarter results as the cybersecurity firm is in a transition phase.

FireEye will announce its fiscal third quarter results after Thursday's close.

Analyst Jack Andrews expects some sales disruptions to have occurred in the third quarter, as certain accounts and territories change hands amid its restructuring efforts.

Andrews estimates non-GAAP EPS of $(0.29), above the Street at $(0.31) and a touch above company guidance calling for $(0.30)-$(0.32). The analyst projects third quarter revenue to grow 5.6 percent to $175 million, below consensus at $182.7 million and guidance calling for $180-$186 million.

Andrews also anticipates an operating loss of $43.2 million, compared to the Street consensus loss of $46.4 million and implied guidance calling for a loss of $45-$50.2 million.

Notably, the analyst forecast third quarter billings to decline 3 percent to $204.2 million, within company guidance of $200-$215 million.

“We also believe that FEYE’s engagement with various channel partners remains a work-in-progress. We remain optimistic on the company's overall product direction, which includes an increasing emphasis on FireEye-as-a-Service, anew MVX architecture, and a next-generation endpoint solution,” Andrews wrote in a note.

Andrews has a Buy rating on the stock, with a price target of $22.

Peer Cyberark Software Ltd CYBR reported better-than-expected third quarter results and a strong outlook.

On the valuation front, Andrews believes shares of FireEye are essentially "washed out" at current levels, given the EV/revenue multiple of 2.1x the consensus FY17 estimate. He believes risk/reward is favorable at current levels for long-term investors.