Morningstar | FireEye Acquires Verodin for Security Instrumentation Presence; Maintaining $15 FVE
No-moat FireEye announced the acquisition of Verodin, a security instrumentation vendor, for approximately $250 million in cash and stock. Verodin provides a cybersecurity platform that organizations use to monitor and measure the effectiveness of their cybersecurity across their network, endpoints, email, and cloud controls. Its products are used to perform continuous simulated attacks to assess the configuration and performance of existing security products. By continuously monitoring a customer's security configurations, Verodin gives insight into vulnerabilities and ensures that teams are not unintentionally exposing their data to possible threats. We think this acquisition is a good fit with FireEye's expertise in security remediation and assessments. After updating our model for management's new guidance, we are maintaining our $15 fair value estimate and see FireEye as fairly valued.FireEye increased its second-quarter revenue target by $1 million and its 2019 revenue range by $10 million. Management expects operating margin to be dragged down by 100 basis points (updated second-quarter non-GAAP range is 0%-2% and 2019 non-GAAP range is 4%-5%) and second-quarter non-GAAP EPS to decrease by $0.01 to $0.00-$0.02. It now forecasts non-GAAP EPS for 2019 at $0.12-$0.16 (down from $0.17-$0.21 guidance after the first quarter). We still expect FireEye to come in towards the higher end of its stated ranges.
In our view, this acquisition gives FireEye another option to sell in its security platform. FireEye's team of experts could improve Verodin's capabilities, while Verodin's platform gives FireEye's team more real-time data that can be used to better serve clients and develop products with stronger threat prevention and response capabilities. According to PitchBook data, Verodin has completed four rounds of funding, with its latest raise of $20.7 million in June 2018 valuing it at slightly over $100 million at that time.
FireEye provides intelligence-based cybersecurity solutions that allow organizations to prepare for, prevent, respond to and remediate cyber attacks. The company's portfolio of cybersecurity products and services is designed to minimize the risk of cyber security breaches by detecting and preventing advanced, targeted and other evasive attacks, as well as enabling management of security operations, including alert management, investigation and response when a breach occurs. The company provides threat detection and prevention solutions, security orchestration, analytics and management solutions, threat intelligence subscriptions, on-demand and managed service subscriptions, and other services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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