What’s Driving FireEye’s Resurgent Climb?
FireEye Inc (NASDAQ:FEYE), the cloud-based security provider, continued to show strong gains at the start of this week, with FEYE stock rising another 11% after last week’s 14% gain.
Following last week’s quarterly report in which FireEye Inc had a 12.6% jump in revenue and a 2.3% increase in billings (rising to $215.4 million in the third quarter, beating analyst expectations of $206.2 million), investors got hot on FEYE stock. Billings are often seen as a good predictor of future business, making the rise a welcome addition and another boon to FireEye stock.
This is a welcome turnaround for the company since CEO Kevin Mandia took over the helm in June. Near the start of his tenure, Mandia announced 350 job cuts at FireEye. Not exactly an auspicious start, to be sure.
But Mandia said in an interview that the company’s results speak for themselves, after FEYE stock’s strong climb. Part of the difficulty facing FireEye stock has been the company’s shift from hardware-based security solutions to more cloud-based offerings. “This is just a transition,” said Mandia in an interview last Thursday. “All companies that are good know how to transition, know how to stomach change, and I’m just proud of our employees.” (Source: “FireEye’s stock soars as cost-cutting leads to big earnings beat,” MarketWatch, November 4, 2016.)
What’s interesting for FEYE stock is that there has rarely—if ever—been a better time to be in the cybersecurity game. With the U.S. presidential election highlighting the issue of leaked e-mails and showing not only how vulnerable we are to hacking, but just how much damage our most innocuous of online exchanges can reap, FireEye may be poised to take advantage of the newfound demand and media attention.
FireEye was ranked 70th on Deloitte Touche Tohmatsu Limited’s “North America Technology Fast 500” list in 2015, although FireEye has had a rough 2016 so far, with FEYE stock down about 34% since the beginning of the year. But, with the pleasant Q3 results, and with cybersecurity being the hot subject it is right now, we might just be witnessing a change of fortune for FireEye stock.
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