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FireEye (NASDAQ:FEYE): Right Time, Right Place, Right Moves

Wednesday, October 28, 2020 | Steve Anderson
FireEye (NASDAQ:FEYE): Right Time, Right Place, Right Moves

About six weeks ago, we last brought up the notion of FireEye Inc. (NASDAQ:FEYE), and noted that it was a risky proposition, but one running in a field-based largely on risk. Since FireEye focuses so thoroughly on cybersecurity, in a time when cybersecurity has become more important than ever—and not just because of the coronavirus breakout, either—it should have been a much greater slam-dunk than it was at the time. However, with the company's third-quarter results now in hand, we find that the risk has paid off, and the company is now bringing out the rewards.

Better Than Expected Everything

FireEye's shares were up better than 6% in late trading at one point, reports noted, thanks in large part to the company's quarterly reports. Revenue for the quarter ending September 2020 came out to $238.6 million, which in turn represented an earnings per share (EPS) figure of $0.11. Given that analysts were expecting $228 million and $0.07 EPS, FireEye beat the count rather soundly.

Better yet, it didn't just beat expectations on revenue; it also beat the previous year's figures as well. A year ago at this time, the company posted an EPS figure of $0.02. Beating expectations is great, but beating last year's figures as well shows a company on an upward growth track. The full-year guidance also got a bit of a boost, with the company projecting between $930 million and $934 million in revenue, up from the July projections of between $905 million and $925 million.

Multiple Growth Drivers

A look at what was driving all this growth, meanwhile, proved to be about the best news of all: there were multiple growth drivers involved. One of the biggest was a continued focus on “cloud-native” operations, as exemplified by the October release—which naturally didn't have much impact on the numbers for the quarter, but served as an example of type—of Mandiant Advantage.

Better yet was a recent partnership with Microsoft (NASDAQ:MSFT) that saw FireEye take advantage of currently-existing Microsoft security products to release its own line of cybersecurity services. A connection to one of the biggest names in computing around—arguably the biggest, depending on who you talk to—certainly doesn't hurt in terms of drawing interest in products. It also doesn't hurt in terms of expanding a customer base, which is vital to making a growing company keep growing. Such growth has already been substantial for the company so far; it's actually managed to beat EPS estimates in each of the last four quarters.

The Analysts are Less Convinced

A company that beats estimates every quarter for a year should seem like a slam dunk in terms of drawing interest. Amazingly, our latest research finds support from the analyst quarter has actually been dwindling for the last six months. Six months ago, the company boasted a consensus rating of “buy” with seven “hold” and 10 “buy” ratings. Fast forward to the current day, and the company is now at a “hold,” with eight “hold” ratings and just six “buy” ratings. Yes, this means three analysts have dropped out of rating the firm altogether, which isn't a helpful development for FireEye.

The company's price target, however, is higher than it was six months ago, but not higher than it was a month ago. This is an unusual development track too; six months ago, the target was at $16.72, reaching a high of $17.10 a month ago before retracting to $16.96 today. Given the company closed yesterday at $14.09, there's still room for growth here, and the overnight / early trade suggests it's going to make a play for that extra room.

Back when we took a look at the stock six weeks ago, it was a bit of a mixed bag. Sure, it was trading under its 200-day moving average, which should have been a disaster, but the latest quarter suggests that that was less of a problem than usual. The market for cybersecurity products is still brisk, and should be for some time to come as the work-from-home trend doesn't look to be going away any time soon. Even if we should see complete reversals in coronavirus trends, it's a safe bet that employees—at least some of them—are enjoying the convenience and flexibility that work-from-home offers, and will push to keep the feature accordingly.

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
FireEye (FEYE)1.4$15.36flatN/A-15.51Hold$16.96
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