FEYE Stock: Gaining from Evolving Cyber Threat Landscape

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FireEye Stock Flies Higher on Strong Results

The stock in focus today is a good example of one of our favorite growth investing strategies. We pick stocks with great products that are likely to gain in the coming years with the rise of the “connected world.”

As the digital age grows, a number of threats will appear on the horizon. Investors could make handsome gains from businesses that help to mitigate some of these risks.

FireEye Inc (NASDAQ:FEYE) is one example. It provides comprehensive intelligence-based cybersecurity solutions and helps organizations prepare themselves against, prevent, respond to, and remediate cyberattacks. The company has more than 40% of the Forbes Global 2000 as its customers, which belong to diverse industries and across different geographies.   

However, the company had been in the process of transforming itself, which had a negative impact on its financial performance as well as on FireEye stock. Investors needed a signal that the cybersecurity firm was executing its strategy well, and this happened last week.

The intelligence-led security company announced fourth-quarter and full-year 2017 results that surpassed all expectations. As a result, FEYE stock popped by more than nine percent. FireEye reported fourth-quarter revenues of $202.3 million, an increase of 10% from Q4 2016. The strong performance was also driven by record sales for products like “Endpoint Security,” “Helix,” and “iSIGHT” threat intelligence.

CEO Kevin Mandia said, “We delivered year-over-year and sequential growth in every major product group and geographic region, and we closed a record number of transactions greater than $1 million.” (Source: “FireEye Reports Record Revenue for Fourth Quarter and Full Year 2017,” FireEye Inc, February 8, 2018.)

The company had been struggling with growth earlier as it tried to bring changes to its business strategy. However, it stuck to its long-term focus, despite many challenges. Mandia pointed out that the company’s threat intelligence and machine-generated cyberattack data provide it with greater visibility into the prevailing threat environment than any other security company.

As the digital world that is centered around connectivity gets more complex, FireEye solutions may have a bright future ahead. The only caveat is that the company has to keep walking the walk, since the field is highly competitive, with big players hovering all over.

FireEye has the ability to deliver intelligence-led security as a service and helps protect its customers. FireEye Helix is its unified security-as-a-service platform that takes care of an organization’s entire security ecosystem.

Products like these should put the company in good stead as the cyber threat landscape gets more complex. This also means more opportunities for FireEye and more gains for FEYE stock.

As per a research report by MarketsandMarkets Research Private Ltd., the cybersecurity market is likely to grow to $231.94 billion by 2022, from $137.85 billion in 2017, representing a compound annual growth rate (CAGR) of 11%. The report further says that the major drivers of the cybersecurity market are cyber terrorism and strict data protection rules. (Source: “Cybersecurity Market worth 231.94 Billion USD by 2022,” MarketsandMarkets Research Private Ltd., July 2017.)  

FireEye is adapting well for the incoming challenges and opportunities of the digital world. The recent results are evidence that the company’s restructuring efforts are bearing fruit and, hence, inspire more confidence.

For the full year, FireEye reported revenue of $751.1 million, a five-percent growth year-over-year. The company also offered optimistic guidance, which bodes well for FireEye stock.

FEYE stock has gained almost 35% over the last year, boosted by the company’s strong results. The following chart shows the roller coaster ride that the FireEye has been through, following its multiple transitions. The company’s efforts to reduce its cost structure and to restructure its global operations appear to be working, and FireEye stock is expected to look up in the coming years.

FEYE stock chart

Chart courtesy of StockCharts.com

Analyst Take

With its recent results, FireEye has once again instilled confidence in its ability to deliver. With best-of-breed technology and cybersecurity expertise, together with cutting-edge threat intelligence, FireEye stock likely has better days ahead.

The company is relentlessly focused on protecting its customers from cyberattacks, deploying innovative technologies and expertise gained over the years. FireEye presents a good opportunity for investors who believe that our increasingly connected world will need a better response against diverse cyber threats. Investors could build a position in FEYE stock on any sign of weakness.