FireEye (FEYE) Expands Mandiant Capability With Respond Buyout

In an effort to enhance the capabilities of Mandiant Advantage, FireEye FEYE acquired Respond Software, a cybersecurity investigation automation company, in a cash-stock deal worth $186 million, last week.

Respond Software’s eXtended Detection and Response (XDR) engine will be integrated with FireEye’s Mandiant Advantage Platform. The deal will combine Respond’s cloud-based machine learning with Mandiant Advantage’s expertise to deliver automated investigation alerts at machine speed to the customers.

New Acquisition Deal Aids Expansion of Mandiant Advantage

Acquisition of Respond Software will enable Mandiant Advantage to include controls-agnostic AI-driven XDR capabilities, supported by the platform’s front-line intelligence, to help customers identify attacks and respond in-time.

Further, the deal will help scale Mandiant’s existing Managed Defense resources, by using cloud-based correlation and intelligent data science models to deliver faster and better security outcomes.

FireEye, Inc. Price and Consensus

FireEye, Inc. Price and Consensus

FireEye, Inc. price-consensus-chart | FireEye, Inc. Quote

Earlier, in October, the company launched the Mandiant Advantage Platform, which includes Threat Intelligence, Security Validation, Managed Defense, and Consulting services.

Additionally, the integration of Respond Software with Mandiant Solutions will extend the platform’s product offerings and the new AI-driven XDR capabilities would drive the company’s top line over the long run.

Capital Investment

Last week, FireEye also announced entering a $400-million capital investment deal with a group led by Blackstone.

Per the deal, Blackstone and ClearSky will purchase $400 million in shares of a newly-designated 4.5% Series A Convertible Preferred Stock of FireEye, with a purchase price of $1,000 per share. The company discloses that the preferred stocks will be convertible in FireEye’s common shares at a price of $18 per share.

Apart from funding the Respond Software takeover, FireEye intends to use the proceeds from investments to support strategic growth initiatives and invest in its cloud platform and managed services portfolio.

Coronavirus-led Remote Working Boosts Demand

Notably, cybersecurity solutions and cloud services are gaining traction in order to facilitate smooth running of business operations in the remote working environment amid the COVID-19 pandemic.

Markedly, the company’s professional services revenues rose 18.5% year over year and its product, subscription and support revenues increased 2.2%, in the recently concluded quarter.

Moreover, strong adoption of FireEye’s Mandiant Solutions and the recent investment along with a robust product portfolio are expected to drive growth for the company.

Zacks Rank & Stocks to Consider

FireEye currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Pure Storage PSTG, CDW Corporation CDW and Arrow Electronics ARW. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Pure Storage, CDW and Arrow Electronics is pegged at 20.3%, 13.1% and 8.5%, respectively.

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