Tomahawk, WI 09/09/2014 (Basicsmedia) – FireEye Inc. (NASDAQ:FEYE) was surging on Monday trading session after its stock was upgraded by UBS AG (NYSE:UBS), from a ‘Hold’ rating, to a ‘Buy.’ In an interview on CNBC UBS Managing Director, Brent Thill, argued that the upgrade came at the back of the ongoing growth being experienced on the cyber solutions landscape.
Thill expects FireEye Inc. (NASDAQ:FEYE) revenue margins to be suppressed this year at the back of completing the acquisition of Mandiant.
“[…] we think the cyber landscape is very robust we think FireEye is a leader. Clearly with a revenue growth as you pointed out will decelerate given the acquisition of Mandiant, which helped the revenue growth this year; so they will have unfair comp next year,” said Mr. Thill.
Thill maintains that FireEye Inc. (NASDAQ:FEYE) is on another level in terms of cyber solutions when compared to its peers, something that is giving it an advantage in the market especially with customers. The analyst expects revenue deceleration to continue overtime but with greater opportunities for growth in the future as more people continue to look for more cyber solutions.
The valuation of the stock as a ‘Buy’ comes as a surprise as it is now trading at a low of 67% from its all-time high of $97; having lost almost two-thirds of its market value since going public. The drop in the market raises questions as to whether the company was from the start built on sentiments and momentum, something that pushed it to the highs $97 trading range.
“[…] The stock got into a league that it didn’t deserve to be in at 25-times revenue there is no cyber security name that is sustainable traded at double digit multiples, and you know we can’t recommend it,” said Mr. Thill.
Thill maintains FireEye Inc. (NASDAQ:FEYE) has a greater potential to grow even further on the fact that its Mandiant acquisition is currently being used to train the FBI as well as other government agencies on how to deal with various cyber breaches.
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