Buy FireEye to Benefit From Cybersecurity

Cybersecurity solutions provider FireEye (FEYE) has dropped almost 23% in the past three months. This is surprising if we consider the fact that FireEye has beaten Wall Street's earnings estimates in each of the last four quarters on the back of impressive revenue growth. For instance, last quarter, FireEye's revenue was up 56% year-over-year last quarter, and I believe that this trend will continue in the future as the company is taking steps to improve its client base. Let's take a look at the reasons why FireEye's drop is a buying opportunity.

The catalysts

FireEye's growth is being driven by its new and improved products across different categories in the cybersecurity segment.

The company is witnessing robust demand across its entire range of product categories, primarily driven by strong customer demand for the company's wide range of solutions. FireEye is increasingly reaching its customers globally, with outstanding growth spread across all key markets.

Importantly, FireEye added over 220 new cybersecurity customers earlier this year and concluded 28 transactions worth more than one million dollars. This was twice the number of seven-figure deals closed during the same period last year.

The continued year-over-year growth in product platform billings, including product subscriptions as well as appliance-based products, will act as drivers for FireEye. On the other hand, the ongoing expansion of recurring subscription billings, including product subscriptions and support, indicate that the company is implementing a sound strategy to improve its financial performance.

Partnerships and products to drive growth

Recently, FireEye entered into an international cybersecurity partnership with HP to deliver intelligent threat and incident response services to HP customers globally. It also announced a strategic partnership with Check Point Software Technologies to share cybersecurity information between Check Point's firewalls and the FireEye NX Network Threat Prevention Platform. Further, FireEye recently announced a strategic agreement to setup a Fuel Cybersecurity Intelligence system to uniquely threat information and consolidate security workflows all through the key vendors and IT technologies.

Also, it has setup the first combined superior security operations center with Singapore Telecommunications Limited (Singtel) in Singapore. Further, FireEye has entered into a strategic mobile security consolidation deal for Samsung KNOX-enabled devices. It has also published attack campaign and threat intelligence studies and key outcomes, along with expectations on cyber security trends. These include publication of several security reports, executing a malvertising operation, an innovative Word document exploit kit, and a long-lasting operation by threat group APT30.

The agreements signed by FireEye with other significant players in the global security market are forecasted to significantly expand the company's customer base, coupled with providing key intelligence to increasingly develop many more advanced security solutions. Moreover, the introduction of SMAC (social, mobile, analytics–big data, and cloud), along with its accelerated adoption across several industries, has induced difficulties linked to information protection and data security that FireEye is looking to tackle.


It can be said that FireEye operates in a fast-growing environment of cybersecurity, which is why the company's financial performance has improved at a rapid pace in the past few quarters. Looking ahead, I think FireEye can continue getting better as it has a strong cash position of $1.19 billion and just $689 million in debt. Thus, investors should consider using the weakness in FireEye's shares as a buying opportunity for the long run.

Published on Sep 4, 2015
By Yaggyaseni Mittra

Copyrighted 2020. Content published with author's permission.

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