Analyst Note| Mark Cash |
We are maintaining our $17 fair value estimate for no-moat FireEye after it announced the sale of the FireEye products business to Symphony Technology Group for $1.2 billion in an all-cash transaction. This is a shrewd deal in our opinion as FireEye’s leading consulting and professional services division were at times overlooked due to its security products not being best-of-breed against sizable competitors with entrenched customer bases. With the pandemic changing the dynamics of the attack surface and a ramped up threat environment, alongside the persistent talent dearth in cybersecurity, the sale is well timed, in our view. We believe that under its new name, Mandiant’s focus on supplementing security teams and automating threat response is the proper strategic decision. Nonetheless, we remain hesitant about Mandiant carving out sustainable customer switching costs. Shares fell over 5% on the news, but we still view shares as overvalued and expect more insight when FireEye reports their second-quarter earnings.