FireEye Inc (FEYE) blamed fewer attacks from China for its crummy quarterly results, but the cybersecurity firm’s problems are actually much more company specific, and that’s why FEYE stock is a dog these days.
Predictably, FireEye stock was pounded after an important measure of future demand missed Wall Street’s forecast.
FireEye said the hacking detente reached between the U.S. and China earlier this year has hurt demand for its security offerings, but there’s more to it than that. After all, analysts note that many of FEYE’s rivals have enjoyed strong quarterly results.
And although FireEye offers a wider portfolio of products ranging from hardware to software to consulting, that’s a disadvantage in some ways.
That puts it in competition against more specialized firms, such as Palo Alto Networks (PANW), Proofpoint (PFPT) and Imperva (IMPV) on one side and big boys like Intel’s (INTC) MacAfee, Symantec (SYMC) and Cisco Systems (CSCO) on the other.
Ultimately, sector-wide spending on cybersecurtity is strong, it’s just that FEYE isn’t getting its share. The loss of two key executives earlier this year certainly did FEYE no favors.
It Gets Worse for FEYE Stock
Whatever the cause, FireEye earnings report missed analysts’ average forecast, according to a survey by Thomson Reuters. Even worse, the company slashed its revenue guidance.
For the three-month period ended Sept. 30, FireEye’s top line grew to $165.6 million from $114.2 million a year earlier, but the Street was looking for revenue of $167.3 million.
On an adjusted basis, FireEye reported a loss of loss 37 cents a share, while the Street was looking for a wider loss of 47 cents. More critical metrics for the future course of FEYE stock, however, were poor.
While billings — a key marker of health — grew 28% to $211 million year-over-year, it was far below its own forecast of $225 million to $230 million given in mid-summer.
FireEye pegged current-quarter revenue at $182 million to $190 million, significantly below the Street estimate for $201 million. For the full year, FEYE slashed it top-line projections to $620 million to $628 million from $630 million to $645 million, well under the consensus for $641 million. The prior outlook — also issued over the summer — was the second time the cybersecurity firm had raised its full-year forecast.
FireEye stock fell more than 23% within the first 30 minutes of trading, and by no means is it a buy on the dip. As we noted recently, FireEye stock is no bargain.
FEYE stock is now off more than 55% since June, with no catalysts to arrest the slide in sight. Anyone holding FEYE stock should look out below.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
More From InvestorPlace
- Berkshire Hathaway Stock: What to Look for in Q3
- Growth Investing: Seasonality Favors Small-Cap ETFs
- 4 Large Caps Splurging on Stock Buyback Programs