Investors who are looking for a potential turnaround candidate in 2017 that can outperform the market should consider FireEye Inc (NASDAQ:FEYE). Despite the stock’s 6% rise year to date, FEYE stock — currently around $13 — is poised to reach $17 per share, delivering some 35% returns.
FEYE Stock and the Need for Cybersecurity
Imagine a world where you didn’t have to keep multiple passwords for the various websites you visit daily and a world where you didn’t have to worry that the point-of-sale system at the checkout counter of your favorite retailer could steal your credit card number and other personal information.
Now wake up.
In the world we live in, it’s cybersecurity companies like FireEye, which accounted for over half of the advanced malware industry revenue in 2015, that help prevent these things from happening.
With hackers attacking major companies like JPMorgan Chase & Co. (NYSE:JPM) and The Home Depot Inc (NYSE:HD), cybersecurity continues to be an increasingly important issue that companies must address, especially as they transition their business more towards mobile platform platforms and mobile apps.
As a pioneer of the green field malware sandbox niche, FireEye is poised to re-capture what it lost in the cyber security space.
FireEye Growth Prospects
In a February 2016 report by consulting company NTT Com Security, half of the 1,000 business executives said they did not have a formal plan in place to secure and protect company data if they were hacked. These corporations now have no other choice by to spend money.
In 2020, these organizations are expected to spend $101.6 billion on cybersecurity software, services, and hardware, according to research by the International Data Corporation (IDC).
That level of spending amounts to a 38% rise from the $73.7 billion that IDC projects organizations will spend on cybersecurity in 2016. This puts FireEye and FEYE stock in a great situation. FireEye still has best-of-breed security offering that can help market share from network security vendors like Cisco Systems, Inc. (NASDAQ:CSCO) and Fortinet Inc (NASDAQ:FTNT), thanks to its malware sandboxing technology, used for detecting advanced security threat before they find their way into a network.
And with the corporations lacking adequate threat-prevention/threat-detection tools, FireEye’s revenue — which have slowed in recent years — should begin to climb.
“Security has become heavily scrutinized by boards of directors demanding that security budgets are used wisely and solutions operate at peak efficiency,” said Sean Pike, IDC’s vice president of security products, in a statement.
Bottom Line for FEYE Stock
FireEye will report fourth-quarter fiscal 2016 earnings results on Thursday. The company, which has beaten analysts’ earnings-per-share estimates in five straight quarters, is projected to lose $1.13 per share in the current fiscal year and lose another 46 cents per share in fiscal 2017.
After losing 41% of its value in 2016, FireEye’s cost-cutting efforts are expected to have meaningful impact on its bottom line, as 2017 adjusted loss projected to narrow from $1.47 per share to 47 cents. Combined with new product launches to grow the top line, FEYE stock could be a hidden gem, reaching $17 per share.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
