Why FireEye Inc. Shares Will Fly to $40

Does this analyst make a good case? Or is it just more noise from Wall Street?

May 23, 2014 at 10:14AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of FireEye (NASDAQ:FEYE) popped 4% in this morning after Barclays upgraded the cybersecurity technologist from equalweight to overweight.

So what: Along with the upgrade, analyst Raimo Lenschow planted a price target of $40 on the stock, representing about 24% worth of upside to yesterday's close. So while momentum traders might be turned off by FireEye's sharp pullback in recent months, Lenschow's call could reflect a sense on Wall Street that the company's growth prospects are now too cheap to pass up.

Now what: According to Barclays, FireEye's risk/reward trade-off is rather attractive at this point. "FireEye continues to be one of the most disruptive technology names with its differentiated, virtual-machine based approach to security," said Lenschow. "We believe the recent pullback among high valuation stocks has created a more compelling buying opportunity for long term-investors and as such we are increasing our rating to OW but taking a more conservative approach with our price target and lowering to $40 (from $50), based on a CY15 EV/Sales of 10x." When you couple FireEye's beaten-down stock price with its cash-rich balance sheet, the downside certainly seems limited enough to bet on those prospects. 

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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