FireEye Analyst Roundup

FireEye Inc FEYE released Q3 financial results Tuesday with mixed results.

Analysts responded to the news as the stock fell 20 percent Wednesday. Thursday, shares traded at 30.04, up 3.16 percent.

Below are analyst comments on the Q3 results along with current ratings and price targets,

Morgan Stanley - Equal-weight, $35 price target

“3Q14 total billings of $165M, up 133 percent YoY and 6 percent ahead of consensus expectations seems at odds with a down 20 percent after hours market reaction. However, total revenues and product revenues came in below consensus expectations as the FireEye business shifts towards product subscriptions, perhaps even faster than the company had anticipated. Fundamentally, we see the shift towards a more managed services type approach to security as well aligned to the changing demand trends in the security market.”

Bank of America - Buy, $44 price target

“Weak guidance adds to concerns over the revenue accounting changes made last quarter, elevating concerns over fundamentals. We disagree and believe the current weakness represents a particularly attractive buying opportunity. Changes to the business model (more services) inject some noise, but on an absolute basis, the company is performing phenomenally well, in our view, with billings up 100 percent and revenues up 112 percent, when adding up the sequential trends over the last four quarters.”

Imperial Capital - In-Line, $32 price target

“We believe FEYE could significantly ramp its recurring subscription revenue over the coming quarters, which could offer greater financial visibility. Notwithstanding the adverse revenue impact of this shift, we highlight the company’s strong billings growth in 3Q14, which suggests significant growth. However, FEYE is continuing to invest aggressively for growth and cash burn remains a significant near-term consideration. In conjunction with the ongoing changes in the business, we think investors could remain on the sidelines until financial performance becomes more consistent and there is greater clarity on the contribution of FireEye-as-a-Service.”

FBN - Outperform, $45 price target

“The company reported billings results above consensus, but we expect the stock to exhibit weakness [Wednesday] due to the following reasons: 1.) FQ3 revenue of $114M came in below consensus of $116M; 2.) FQ4 billings guidance of $195-210M has a lower high-end ($210M) than the prior implicit guidance for the high-end of FQ4 billings, which was $215-220M; 3.) DSO grew to 123 days, up 20 days Q/Q, as the quarter was back-end loaded; and 4.) a rising average contract length for new orders as this metric was 34 months (due to having many 5-year government deals) vs. 31 months in FQ3 2013 (so the quality of the billings growth was a bit weaker).”