FireEye Inc (NASDAQ:FEYE) a cyber-threat management company, has received a key upgrade from analysts at Wedbush. In a report dated April 8, 2014, analyst Sanjit Singh has upgraded the stock from Neutral to Outperform but cut his price target from $72 to $62 a share.

FireEye

FireEye shows signs of growth

The analyst said he upgraded FireEye Inc (NASDAQ:FEYE) because the company keeps delivering robust growth even though its share price has declined. He notes that the stock has fallen by about 43% just over the last month alone. He believes the market is simply correcting its valuation of technology companies which have high multiples. As a result, he cut his price target to reflect the market’s multiple contraction.

He also believes the decline in FireEye Inc (NASDAQ:FEYE) shares is a result of the recent expiration of a share lockup and a secondary offering which was “well below the current market place.” He also points to some “unfavorable headlines” from testing companies.

FireEye’s channels check out

The Wedbush analyst reports that his North American channel checks suggest that demand remains strong and that there is “widespread enthusiasm” for the company’s combined FireEye / Mandiant platform. He believes this platform will result in first quarter revenue results and billings guidance.

Singh spoke to 19 of FireEye Inc (NASDAQ:FEYE)’s channel partners in North America, and 16 of them said they were “above plan for the March quarter.” He said although his checks suggested typical January weakness, February and March were better than seasonal because of strong demand for the company’s cyber-security solutions.

FireEye in the platform wars

He calls the company’s approach to the cyber-threat landscape “pragmatic” and says it is tailor-made for the specific needs of enterprises. The analyst also says he is wary on any technology which guarantees protection against cyber-threats, but he thinks FireEye Inc (NASDAQ:FEYE) has been executing very well, specifically in one area. He thinks this one area, which is cutting down how long it takes to detect a problem and then remediating that problem, is the most important corporate problem. The average time to detect a problem and fix it is 240 days.

The analyst notes that the “platform wars” are underway, but he believes that FireEye Inc (NASDAQ:FEYE)’s technology is especially compelling because its technology runs end to end. He believes this will enable FireEye to consolidate what is a $20 billion to $25 billion total addressable market. He also believes the company is the disruption the security market needs right now.

Sing increased his first quarter and 2014 billings and revenue estimates. His first quarter billings estimate rose from $88 million up to $90 million, while his 2014 estimate increased from $550 million to $560 million. He increased his revenue estimate for the first quarter from $71.5 million and his 2014 estimate from $406 million to $411 million.

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