FireEye Inc (NASDAQ:FEYE) needed some strong earnings this quarter, and they certainly got that. As InvestorPlace’s Karl Utermohlen reported, on an adjusted basis, FireEye stock hit a penny a share profit. This was a significant improvement over the year-ago quarter, where FEYE absorbed a three cents per share loss. On the sales front, the cybersecurity firm hauled in $202.3 million against a $193.7 million consensus forecast.

FireEye reported earnings after Thursday’s session, and during after hours trading, FEYE skyrocketed. FireEye stock opened this morning up 13.6%, and as of this writing is still up about 6%.

Expectations for FireEye Stock

Shareholders were looking for this type of performance. Since it went public, owning shares of the cybersecurity company has been an exercise in both potential and patience. And investors are running out of the latter.

Unfortunately, FEYE stock may continue to stretch what little patience remains. Although the after-hours performance was impressive, we’ll see if FEYE can maintain momentum. I have some doubts.

Overall, I was one of the few analysts that was always bullish on FireEye stock, and I still am. As I wrote back in May, FEYE has strong leadership and vision and an even stronger industry.

Even with a sharp correction late last year, FEYE stock is up 15.6% since my write-up.

Moreover, I really don’t like FEYE’s technical posture. As you can see from the chart, FireEye stock is forming a bearish head-and-shoulders formation, and that could drop shares to $12 or lower.

And if it does: buy it!

Cybersecurity is Bigger Than FireEye Stock, Or the Competition

I would be remiss not to mention that FEYE doesn’t have great financials. In fact, according to the Altman Z-score, the company is in distress.

The financial situation is concerning. We should note the underlying industry, however. Cybersecurity is a massive entity, and it will only become more important as the years go by.

Computer hacking and data breaches have impacted several big names, such as Target Corporation (NYSE:TGT) and Home Depot Inc (NYSE:HD). But the biggest one by far is last year’s Equifax Inc. (NYSE:EFX) data leak. It’s not just the data breach’s magnitude, which was horrendous and unprecedented. What the Equifax disaster proved was that no organization was completely safe.

The Equifax incident sent shockwaves throughout the entire business landscape. When news first broke, FEYE stock soared for a few months before crashing back down in November due to less-than-stellar guidance issued during Q3 earnings. I think the markets missed the bigger picture then, however, and they are still missing it.

The company’s security application, Helix, is a game-changer. Not only is it a remarkable defense against various computer and network-related attacks, Helix offers scalability. Clients no longer have to overhaul their entire IT system to integrate Helix; instead, they can implement the application incrementally, ensuring that it’s compatible with their system.

And believe me, the clients will come. By the year 2021, the size of the global cybersecurity market will jump to over $202 billion. I think this forecast might even be too conservative, given the high-profile breaches we have witnessed recently.

Huge Upside Potential for FEYE Stock

I believe FireEye stock has established a practical bottom around $12. Multiple times, we’ve seen the bears attempt to crack that level, but FireEye stock has held up exceptionally well. With so many underlying positives buoying the company, I doubt the bears will be successful.

I’m not very confident about the broader markets, however. We may have gone up too much without a serious correction. Perhaps, that’s what we’re getting right now.

But still, I wouldn’t give up on FireEye stock.

While many other companies have to deal with declining, stagnant, or saturated industries, FEYE is levered towards a growing one. Moreover, the markets don’t seem to be appreciating cybersecurity’s importance in the grand scheme of things. That’s the contrarian opportunity you should exploit to your advantage!

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.