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Burned Investors Still Wary of FireEye, Despite Upgrade: StockTwits

NEW YORK (TheStreet) -- An analyst upgrade and company news salved burned FireEye (FEYE - Get Report) bulls Tuesday. However, after a massive drop from March's all-time-high, many investors on remained wary of the enterprise cyber security firm.

$FEYE optimism is good, but i remember people trying to catch this falling knife from $95

-- the twit (@the__twit) Apr. 8 at 10:02 AM

FireEye shares have fallen more than 20% in the past five days amidst a broader market sell-off that spurred investors to abandon higher-risk growth stocks. The company trades at 43 times 12-month trailing sales and was named one of the 500 fastest growing technology firms by Deloitte.

But investors caught a break this morning as shares climbed 4% after a Wedbush analyst upgrade. In a Tuesday note to clients, analyst Sanjit Singh raised FireEye's rating to outperform from neutral, saying he sees "robust growth." He set a $62 price target on shares.

FireEye traded at around $51 this morning after losing some of its initial gains.

$FEYE Does it pay to chase, or does the chaser pay? Guess we will know in a few...

-- Syntec Ventures (@SyntecVentures) Apr. 8 at 09:20 AM

Some investors expressed surprise that FireEye shares didn't go higher. The stock is down about 47% from an all-time-high of $95.63, hit on March 5.

$FEYE an upgrade's only worth 4% now even after a 50% crash?

-- JLL IV (@TXplunger) Apr. 8 at 09:34 AM

FireEye also released a report Tuesday highlighting four techniques used by cyber criminals to evade detection by traditional antivirus software. The company said it has monitoring capabilities to find and resolve these more advanced threats.

The company will announce first quarter earnings on May 6, according to a press release Monday. Analysts expect an earnings-per-share loss of 53 cents on $71.79 million in sales, according to data published by Yahoo Finance. Last quarter, the company's guidance for first quarter sales was between $70 million and $72 million, with an EPS loss of 51 cents to 56 cents.

To date, FireEye has focused on building its business rather than on profits. The company went public in September 2013 and lost $120.6 million last year. Early this year, it acquired privately held security company Mandiant in a deal valued at around $1 billion.

Shares hit an all-time-high a couple days after the company filed its full-year earnings statement with the SEC. Some highlights from the 10K included billings growth of 102% in the fourth quarter, compared to the same period the prior year. The company, which leases its software to global 2000 companies, said billings came in just shy of $98 million in the last three months of 2013.

FireEye sells its software by giving businesses a short-term trial. In 95% of cases, according to the firm's 10K, FireEye finds threats undetected by the enterprise's existing security programs. Investors have bought in to FireEye's story of real-time, advanced threat-detection techniques beyond the scope of consumer computer-security companies. This morning's positive momentum encouraged some investors to add to positions.

$FEYE looks like a nice long here at these levels. In some already, may add if it starts to break out.

-- James Smith (@creativeflood) Apr. 8 at 08:37 AM

However, most fled by 11 a.m., when the stock lost some of its early gains. Many remembered how it retreated from the $95 mark.

Despite the 70% bullish sentiment, according to StockTwits' analytics, some said that they wouldn't stay in for long.

$FEYE I'm out from 49.5, market still feels heavy. Not trusting

-- James Smith (@creativeflood) Apr. 8 at 09:51 AM

$FEYE retail investors worst nightmare. repeated noisy upgrades and insiders fleeing. morning pops sold

-- CapsFan (@rodlong) Apr. 8 at 09:51 AM

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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