FEYE - Embedded Expectations Analysis - 2021 09 23
FireEye, Inc. (FEYE:USA) currently trades at a significant premium to UAFRS-based (Uniform) assets, with a 5.5x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about Managed Defense demand, the Mandiant Advantage platform's capabilities, and competition in the intelligence business.Specifically, management may have concerns about the sustainability of rising demand for Managed Defense and multimillion dollar Managed Validation transactions. In addition, they may lack confidence in their ability to expand the capabilities of the Mandiant Advantage platform and help organizations mature their security posture, and they may be overstating their focus on consumer protection following the products business divestiture. Finally, management may have concerns about the progress of the Automated Defense rollout and they may be downplaying concerns about competition in the intelligence business.
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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