Analyst Note| Mark Cash |
We are maintaining our fair value estimate of $17 for no-moat FireEye after second-quarter results that underwhelmed as revenue faced headwinds due to organizations moving away from on-premises, term-based licenses to cloud-based solutions. Shares fell 12% to around $18 and we view them as slightly overvalued. As previously announced, FireEye is expected to close the sale of its products division by the end of 2021 for $1.2 billion to focus on its consulting, managed services, and cloud security SaaS offerings. In our view, a heightened threat environment due to work-from-anywhere enablement and increased reliance on cloud-based solutions is causing organizations to scrutinize their security posture to avoid being the latest malware or ransomware victim. While we anticipated these trends to lead to higher revenue in the quarter, we believe the continuing operations, or Mandiant, portion of the business is trending in the right direction for the long term.