BofA Upgrades FireEye On Execution Of Transformation Plan

FireEye Inc FEYE has been executing well on its transformation plan and its new initiatives are growing faster than the declines in its legacy business, according to BofA Securities.

The FireEye Analyst: Tal Liani upgraded FireEye from Neutral to Buy and raised the price target from $22 to $27.

The FireEye Thesis: The company’s Platform, Cloud Subscription and Managed Services segment grew by 20% year-on-year in the fourth quarter, while Professional Services grew by 15.4%, Liani said in a Thursday upgrade note.

Together, these segments comprised 58% of FireEye’s fourth-quarter revenues and 66% of billings, the analyst said. 

“Revenues from legacy products stabilized at -8.3% YoY, which mostly reflects the migration of the same solutions from on-premise to Cloud. At a high level, the company generates strong cash flow in the legacy segment, reinvesting it in new areas and driving growth acceleration across the board,” he said. 

“We expect the revenue growth to accelerate to 7% and 7.6% in ‘21 and ’22, with solid margins, which could drive share price upside.”

FEYE Price Action: Shares of FireEye gained 4.43% Thursday, closing at $20.96.

Photo: Thomas Springer via Wikimedia Commons.