FireEye Stock Gets Hit After Earnings (FEYE)

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Top cybersecurity operator FireEye (FEYE) has been on a tear this year, with FEYE stock up a sizzling 43%. But now gravity is taking hold. On news of the FireEye earnings report, sellers are making a move on the stock, which is off 5% in early trading.

cybersecurity-stocks-feye-stockEven though the quarter was solid, there were some nagging issues, including the unexpected departure of CFO Michael Sheridan. Besides, FEYE stock was probably also vulnerable to some profit-taking.

So, let’s dive into the details of the FireEye earnings report: In Q2, revenues shot up 56% to $147 million, and the adjusted loss came to 41 cents. The Street had forecast revenues of just $121 million and a bigger loss of 48 cents per share.

The guidance for the current quarter was also good. FEYE expects revenue to come in between $164 million and $168 million, and the loss to be between 44 cents and 48 cents. Analysts were forecasting revenues of $164 million and a loss of 46 cents per share — putting FireEye’s guidance right on target.

FEYE Stock Still Solid

As should be no surprise, FEYE is having no problems racking up new customers. In Q2, the company added roughly 300, bringing the total to over 3,700.

It certainly helps that FEYE has continued to be aggressive with its R&D. As CEO Dave DeWalt indicated, “We now have more than 9 product lines generating more than $10 million in quarterly sales. Each product line offers multiple deployment options, add-on subscriptions, and upgrade opportunities.” And the company has six new products or services that are generating $1 million on a quarterly basis.

But another key for FEYE is its Mandiant division, which provides high-end cybersecurity analysis, consulting and forensics. Whenever there is a major breach, it seems that Mandiant is the to-go partner. Some of the customers include Sony (SNE), Anthem (ANTM) and Target (TGT), all of which have been victims of high-profile security breaches.

So, what about the departure of the CFO? Granted, an exiting officer is always a concern for a public company. But there has been lots of turnover in the red-hot tech sector. After all, some CFOs may prefer the excitement of early stage companies. And if the company is showing no signs of a slowdown, a departure may not mean much anyway. Just look at Facebook (FB), whose CFO left a couple years after the IPO.

Now it’s also true that the FEYE stock price is far from cheap, with the price-to-sales ratio at lofty 16. But given that cybersecurity is a must-have for companies and that FEYE is a top player in the space, it seems reasonable for the multiple to be at a premium. Again, the company also is showing no signs of a slowdown, and the innovation remains strong.

So given all this, FEYE stock does look like a good opportunity right now — especially given the big dip today.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2015/07/fireeye-feye-stock-earnings-report/.

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