FireEye's (FEYE) Quarter Better Than Feared and Acquisition to Be Accretive in '16 - FBR

After the close, FireEye (NASDAQ: FEYE) announced the acquisition of iSIGHT Partners, a privately held threat intelligence player. The deal includes $200M of cash plus a potential $75M in cash/equity upon achievement of booking targets. The company has roughly $1.2B of cash in its treasure chest. The deal is expected to be modestly accretive to 2016 operating income/cash flow, and FBR Capital analyst, Dan Ives, believes iSIGHT's actionable threat solutions could have synergies with existing intelligence/analytics solutions.

In conjunction with the announcement, FireEye reported preliminary 4Q15 (Dec) revenue and pro forma EPS ranges of $184M–$185M and ($0.36)– ($0.38), versus the Street's $186M and ($0.37) estimate.

The billings number for 4Q is now expected to be in the $256M–$257M range (21% YOY growth) versus guidance of $240M–$260M. With massive Street fears around the cybersecurity space and especially FireEye heading into this "white knuckle" earnings season, we believe investors will cheer the company's solid billings performance.

Management also expects to grow 2016 billings organically by 20%, which is a step in the right direction and slightly ahead of our estimates. The deal is expected to be modestly accretive to 2016 operating income/cash flow, and we believe iSIGHT's actionable threat solutions could have synergies with existing intelligence/analytics solutions.

The company will report final results on February 11.

The firm maintained a Market Perform rating and $28 PT.

For an analyst ratings summary and ratings history on FireEye, Inc click here. For more ratings news on FireEye, Inc click here.

Shares of FireEye, Inc closed at $14.87 yesterday.

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