FireEye Rallies from Lows, Just in Time for Cybersecurity Month

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FireEye Rallies from Lows, Just in Time for Cybersecurity Month

October is cybersecurity month, and a pioneering stock in the industry has come to life.

FireEye (FEYE) has rallied 15 percent in the last two weeks and is having its best month in more than two years. A combination of takeover speculation, improved results and turnaround efforts are fueling the move.

The move started on October 2 when Business Insider reported FEYE was seeking a buyer. Analysts started throwing around numbers close to $22 as a potential valuation, well above its $13-14 range at the time.

Six days later management said revenue would be “at or above the high end of the Company’s prior guidance range.” It also unveiled upgrades to some of its products in a presentation to analysts.

FireEye (FEYE) weekly chart showing price history since 2013 IPO.
FireEye (FEYE) weekly chart showing price history since 2013 IPO.

Most of the response seemed to be positive, although FEYE has a long history of disappointing investors. It went public to much fanfare in September 2013 for $20, and soared as high as $97.35 by the following March. It struggled to make money and soon the honeymoon was over. The shares slipped under $20 by early 2016 and have been there ever since.

Earnings This Month

Is FEYE finally due for a turnaround? Investors may get a clue when it reports its next quarterly numbers after the closing bell on October 29.

The glass-half-full crowd might also see potential value because it trades for less than 4 times revenue. Peers like Fortinet (FTNT) and Palo Alto Networks (PANW) trade for twice that amount, which makes sense because FEYE is less profitable. But what if management successfully turns the business around?

In conclusion, cybersecurity remains a big growth area as more data goes online. An early leader in the space has been dead in the water for years, but now it may be getting a second look.

Note: This post is intended for educational purposes only and shouldn’t be viewed as a trade recommendation.

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