FireEye Completes $400M Investment Deal; Street Sticks To Hold

FireEye announced that it has closed a strategic capital investment deal led by Blackstone. The deal was announced on Nov. 19 under which Blackstone along with ClearSky agreed to invest $400 million in the cybersecurity solution provider.

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As part of the transaction, the investment firms have purchased 400,000 shares of FireEye’s (FEYE) 4.5% Series A convertible preferred stock at a price of $1,000 per share. The preferred stock will be convertible into the company’s common shares at a price of $17.25 per share. FireEye shares closed at $13.83 on Friday.

FireEye had previously stated that the net proceeds from the deal would be used “to support strategic growth initiatives, including the acquisition of Respond Software, as well as increased investment to accelerate the growth of the company’s cloud, platform and managed services portfolio.” (See FEYE stock analysis on TipRanks)

Additionally, the company said that “Viral Patel, a Senior Managing Director of Blackstone, and Art Coviello, former chief executive officer of RSA Security, have been appointed to the FireEye Board of Directors, effective immediately.”

Last week, the company reported that it was hit by a cyberattack. FireEye notified that hackers stole some sensitive “Red Team” tools.

On Dec. 9, Citigroup analyst Walter Pritchard reiterated his Hold rating on the stock. Commenting on the latest FireEye’s Red Team cyberattack, Pritchard said that the data breach could tarnish the company’s reputations and pose a risk of customers not buying its solutions.

Overall, the Street is sidelined on the stock. The Hold analyst consensus is based on 2 Holds, 2 Buys and 1 Sell. The average price target stands at $17.50 and implies upside potential of about 26.5% to current levels. Shares have dropped by 16.3% year-to-date.