Raymond James analyst Michael Turits maintains a Market Perform rating on FireEye's stock.
Morgan Stanley analyst Melissa Franchi maintains at Equal-Weight, $16 price target.
Bank of America analyst Tal Liani maintains at Buy, $20 price target.
Raymond James: Key Highlights
FireEye reported a 3% revenue beat versus expectations aided by a 28% year-over-year growth in services revenue and some upfront revenue recognition on appliances, Turits said. Net new annual recurring revenue rose 60% year-over-year to $26 million while total ARR rose 7% to $576 million.
Cloud billings were "strong" and rose 35% from last year to $85 million and the company inked its largest Verodin deal ever, signed its first international deal, and closed two deals north of seven figures.
The company did see a decrease in total large deals (more than $1 million) from 43 last year to 37 and Turits said this could prove to be a longer-term trend as mid-size businesses are more likely to buy a cloud based product through the channel.
Management also declined to discuss media reports it's struggling to sell itself and is looking to sell the products segment, the analyst wrote.
"While encouraged by the strength in cloud and services, we continue to view FireEye's selling proposition as challenged by separate enterprise buying cycles and buying centers, and question whether FireEye can accelerate revenue growth to double digits with the current portfolio," Turits wrote in a note.
Morgan Stanley: Encouraging Signs But More Confidence Needed
FireEye deserves credit for showing some encouraging signs of traction but management has more to prove before turning positive on the stock, Franchi said. Specifically, cloud subscription billings growth of 43% (32% organic) and Mandiant services billings growth of 40% shows the product portfolio is "gaining some traction."
However, ARR growth remains mostly stable at 7% and management's fourth-quarter billings outlook was guided "modestly lower." This makes it difficult for investors to have confidence in management's guidance through 2024, which calls for 12% to 16% compounded annual billings growth versus an estimated 10% growth in 2019.
"It remains difficult to give FireEye the benefit of the doubt at this relatively early stage of the transition," the analyst wrote.
BofA: Look Through Near-Term Transition
FireEye's report showed a slowdown in revenue growth to 7% year-over-year but investors should look for positives "beneath the surface and the light at the end of the tunnel," Liani said. Specifically, billings in the Platform/Cloud segment which includes next-generation SaaS and FireEye-as-a-Service business performed well and billings accelerated to 43% year-over-year and 34% quarter-over-quarter.
Billings in the Mandiant business were also strong with billings growth of 40% year-over-year and 21% quarter-over-quarter.
The two segments combined for 56% of total billings and could expand as much as 80% by 2024 from new products like Verodin and Expertise-on-demand.
"We look through the transition, believe the low valuation takes the challenges into account, and expect that 2020 will likely prove more positive for billings and revenue growth," Liani wrote.
Shares of FireEye were trading lower by 0.8% Wednesday at $15.35.
Latest Ratings for FEYE
|Oct 2019||Initiates Coverage On||Hold|
|Aug 2019||Initiates Coverage On||Buy|
View More Analyst Ratings for FEYE
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