FireEye Inc. (NASDAQ:FEYE) turnaround is gaining traction depicted by renewed investor interest and the stock outperforming other computer and technology Stocks. The stock is already up by more than 40% and showing no signs of slowing down after powering through a key resistance level.
FireEye Price Analysis
Investors starting to focus on the company’s strong earnings growth potential has helped strengthen the stock’s upward momentum. The stock has resorted to trading in an uptrend in recent months with pullbacks emerging as buy opportunities. FireEye is currently trading at two-year highs having rallied by more than 40% since the start of the year. With the stock currently trading at the $21 a share, the next stop could be the $24 a share mark, seen as the immediate resistance level.
Given that the stock is currently flirting with two year’s highs, pullbacks from current trading levels should experience strong support at the $18 mark. A breach of the critical support could leave the stock vulnerable to further declines; back to the $15 a share level, the next substantial support level.
Upward Momentum Catalyst
FireEye looks set to continue powering high having become organized, especially on the earnings front. Revenue growth, as well as customer growth, are some of the factors that continue to strengthen the stock’s sentiments in the market.
Revenue in the recent quarter surged 7% to $ 212 million, well above a guidance range of between $206 million and $210 million. Billings in the quarter were also up by 8% to $219 million at the high end of a trading range of between $210 million and $220 million.
In the quarter, the company struck more than 40 deals worth at least $1 million, attesting to growing demand for its offerings key to revenue growth. Cash flow in the quarter came in at $22 million representing a 75% increase.
“Continued strong billings performance translated to an acceleration in revenue growth in the quarter. As a result, we exceeded the high end of our operating margin guidance range and delivered non-GAAP operating profit on a year-to-date basis,” said Frank Verdecanna, FireEye chief financial officer.
FireEye once again reiterated the underlying growth by issuing fourth-quarter guidance that beat estimates. The company expects revenue to range between $214 million and $218 million. Billings should come in between $245 million and $255 million.
The company adding 243 new customers in the quarter, nine more, than it did last year all but affirmed the fact that the company is finding momentum after stagnation in recent years. The company has added 747 new customers in the first three quarters of the year an increase of 8% compared to last year.
Bottom Line
FireEye skyrocketing to two-year highs does not come as a surprise but at the backdrop of strengthening underlying fundamentals. The stock is yet again the darling of Wall Street as it continues to outperform the broader sector.
Renewed investor interest in the stock comes on growing confidence that a transition from the appliances business to software and service is finally bearing fruits. The stock has already surpassed Wall Street average price target attesting to strengthening investor confidence about long-term prospects.
FireEye has outpaced other computer and technology stocks as investors take note of the fact that it has entered a good phase of stable billings growth. The recent financial results provide clear evidence of what to expect when it comes to sustainable growth, increasing profitability and cash flow. Going forward FireEye should continue climbing up the charts on earnings growth and revenue beat.