Is FireEye the Best Cyber Security Stock to Buy?
FireEye remains an impulsive stock
Palo Alto Networks (PANW) is the world’s leading networks security company, followed by FireEye (FEYE) at second position.
The company dominates the market when it comes to the demand for specialized threat analysis and protection (STAP). According to a report from IDC, FireEye accounts for 37.9% of the STAP market in 2014, whereas its flanking rival, Landcope, captured only 5.4% of the STAP market.
When it comes to the overall expenditures on cyber security, STAP relics a relatively trifling market, however it’s mounting quickly. According to IDC, the company’s total spending on STAP escalated more than 125% to $930 million in 2014, as compared to the spending in 2013. The company as well as IDC expect a lot of growth in demand for STAP, and will surge to around $3 billion in 2019. If the company can retain its shares in the market, it could be producing a lot of revenue from its STAP products in the coming years.
Despite the increased STAP expenditures in 2014, the company faced minor problem, as its STAP market fall 5.2%, as compared to 2013. The information provided by IDC is approximately a year old, but the things have changed a lot since then, as the shares of the company have plummeted more than 50% in just a few months. Many members of FireEye’s management team have departed, comprising the loss of FireEye’s CFO. FireEye’s weak earnings report has also been a headwind as the company’s revenue growth fell below the analysts’ estimates.
At present, FireEye is not a lucrative investment opportunity. However, if the company’s STAP market carry on to magnify, the company can extract huge profit from the cyber security market. I recommend investors to watch the stock from sidelines and wait for a better entry point.
Published on Jan 6, 2016By Yaggyaseni Mittra