FireEye Is a Tremendous Buy

The cyber security market is booming and although many companies in the sector are still loss-making, they should be highly profitable in the far-off future. As of now, FireEye (FEYE) is my favourite pick from the sector as the company reportedly rejected a few acquisition offers. With acquisition still in the cards, FireEye makes for a great speculative play for investors.

Cyber security market is booming

FireEye has been facing problems primarily due to the cyber security firm’s declining sales growth, surging competition, cash spending rate etc. The company reported weak quarterly results and that further excavated the stockholders' fears about its condition.
FireEye not only fell short of sales but also detailed that the company’s CEO Dave DeWalt is resigning.

However, that's not the end of the story. As the company’s top-line of $168 million looks thwarted, it still shows a surge of 34 percent year over year. Moreover, FireEye is also putting a lot of effort into adapting the gradually rising complex cyber security landscape with its comprehensive Global Threat Management Platform. The company’s persistent improvements and advancements to its security products should permit it to grow rapidly compared to its rivals.

On the other hand, cyber threats are growing rapidly in frequency and severity, forcing companies, government corporations, etc. to adopt cyber security measures. The cyber security market is intricate because it comprises several types of threats which can be solved by different solutions.  FireEye focuses on APT (advanced persistent threat detection), which prevents a variety of attacks that include extremely erudite attackers working coordinately over a long period of time.

A few years ago, FireEye anticipated that its entire addressable market would reach over $30 billion, but consensus has been noticeably more dubious, anticipating long-term demand at around one-tenth of that figure. As a matter of fact, MarketsandMarkets projects that the worldwide cyber security market will reach $170.21 billion in the next five years, a surge of $70.21 billion compared to existing worth of $100 billion. This clearly signifies the growth prospect in the industry.

Stockholders, on the other side, should keep in mind that the company is selling into a rising market, which is not likely to be wiped out anytime soon. Moreover, the company has the ability to capitalize on a swiftly growing niche market. As a result, I think FireEye is a great speculative play at current levels.
Published on Jul 13, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

Posted in ...