It is still difficult imagine the levels FireEye, Inc. (NASDAQ:FEYE) is trading after being a high flyer about four years ago. The great performance came in the immediate aftermath of acquiring Mandiat. Till date, the Mandiat acquisition is the most valuable in the U.S. Information Technology Industry.
In a deal valued in the region of $1 billion, Mandiat was an instant hit. However, FireEye was not able to rake in revenue equal to the price of the acquisition.
FireEye, Inc rising from the ashes
Interestingly, the company’s stock went down to a little over $13 in the 1-year low registered this year. The stock picked up a bit and then continued to oscillate in the danger zone for some time. Basically, FireEye Inc is stuck in a price back and forth it hit the all-time high of $90 a share in 2014.
However, the stock ended 2017 on a positive note after registering a 20% increase for the previous year’s performance. Further, the stock kicked off 2018 in the green zone. As at February, the stock was up approximately 16% year-to-date.
After the Q4 results for FY18, the stock added a further 10% value to the share price. Basically, investors rewarded the company for achieving better than expected results during the quarter. Further, the company’s earnings per share (EPS) during the quarter beat the consensus EPS.
The Q3 2018 revenue is keeping up the trend of positive increases. In particular, the company registered $212 million in total revenue for the whole quarter. Further, the annual recurring revenue also upped by 10% to $538 million compared to the similar quarter last year.
Improvements on productivity and efficiency
However, the company saw the highest margins of increase in the cash flow generated. For the third quarter of 2018, the company registered $22 million as cash flow from operations. As such, the figure represents a 75% increase from Q3 2017.
Another area the firm is registering impressive growth is the billing sector. In the most recent results, the billings were $219 million, an 8% jump from Q3 2017.
According to Frank Verdecanna, FireEye CFO, the strong billings numbers are responsible for the huge revenue growth.
“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,” Verdecanna said.
Interestingly, the firm credits the strong performance to recent improvements on productivity and efficiency.
Strong upside to the share price
Kevin Mandia, FireEye CEO believes they are on track to returning FireEye to sustainable growth. Further, the CEO is confident profitability and cash flow will continue to increase.
“At the same time, we have accelerated innovation across our portfolio of product and services. With our expertise and intelligence driving a continuous innovation cycle, this is an exciting time to be at FireEye,” Mandia said.
As the growth values continue to appear in the green, the stock too is picking up. Particularly, the share is price up 46% from the lowest price achieved in August this year.
Source: StockCharts.com
On the other hand, the relative strength index (RSI) indicates strong momentum for the share price. With a value of 54.48, the RSI indicates that the stock is in a good place to pick up further growth. Further, the RSI value shows neither an overbought nor an oversold situation for the stock.
Furthermore, the 50-day and the 200-day moving averages indicate that the share price has a strong upside. Particularly, MA (50) establishes support at $18.23 which is slightly higher than its 200-day moving average.
The MA (200) indicates that there is enough demand for FireEye to rest at $17.16 in case of an unexpected tumble.