The curious case of FireEye (NASDAQ: FEYE) - Market News | Financial Buzz

The Curious Case of FireEye (NASDAQ: FEYE)

Cyber Attack, PlayStation, Sony, SNE, Target, TGT2014 has been, among other things, a year full hacks. Numerous cyber attacks on large businesses taught us that hackers are becoming more sophisticated, and more dangerous. Starting from the damaging attacks on retailers like Target (NYSE: TGT), Staples (NASDAQ: SPLS), entertainment companies like Sony (NYSE: SNE), which has been hacked twice, one attack targeted the PlayStation network, and the second targeted Sony Pictures in a successful attempt to damage property and reveal private information. Just to make the cyber-attack wave a little scarier than it’s already is, Turkey may have witnessed one of the first cyber attacks that caused physical damage to infrastructure, making an oil pipeline explode.

The explosion accrued in 2008, but details from the investigation are emerging only now. According to Bloomberg News, “Hackers had shut down alarms, cut off communications and super-pressurized the crude oil in the line.” The recent trend of cyber attacks is expected to get worse and more frequent, and businesses and governments are now relying on companies developing new security platforms and systems designed to prevent the next generation of cyber-attacks.

FireEye Inc (NASDAQ: FEYE), is such a company. The FireEye security system is popular among businesses in various industries and governments. FireEye client list includes the U.S. Dept. of Defense, Sallie Mae (NASDAQ: SLM), Equifax (NYSE: EFX), Juniper Networks (NYSE: JNPR), and more.

The company’s approach to fight hackers is quite interesting, their system misleads hackers into targeting fake files while notifying the potential victim of an attempted attack. In order to stay on top of the game, FireEye decided to spend aggressively on research and development as well as selling and marketing, to the point the company spends significantly more than total revenue, and thus FireEye still sees negative earnings.

This November the stock of the company lost almost 20% after the company lowered their projected revenue growth, due to the heavy investments. During their last quarter, the company reported $114 million in revenue while investing while investing $141 million into selling and marketing and $55 million into R&D.

When it comes to revenue growth, FireEye is doing well, showing consistent growth of about 20% from one-quarter to another. While heavy investments keep the company operating at a loss, it also means that FireEye understands the difficulties it has to deal with as hackers are becoming more and more of a threat. Currently, the company is trading at near 52 week low and is still at a good entry point since November. At its current price and potential of growth, FireEye is certainly worth a look.

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