FireEye Stock Can Rebound as Global Threat of Cyber Crime Rises

NEW YORK (TheStreet) – If you own shares of enterprise security company FireEye (FEYE) you've felt anything but secure this year. Since reaching a 52-week high of $97.35 in March, the stock has been down by as much as 73%, reaching a low of $25.58 on May 15.

Shares are currently trading around $34, down 22% on the year to date, trailing the tech sector's 9% gain. FireEye reports financial results for its second quarter Tuesday.

Investors who have held on beyond March are kicking themselves. Now, however, it is important to  identify where is the stock heading from here.

FireEye shares, which have already bottomed, are now trading at a discount to their fair value. Matthew Nikman, an analysts at Goldman Sachs, believes FireEye is worth $42 per share, which represents roughly 28% premium from Friday's close. Nikman believes FireEye's growth prospects are more attractive that others within the industry including Cisco (CSCO) and Juniper (JNPR).

In his research note to investors, Niknam dispelled investors' concerns about FireEye's growth rate, saying:

"We expect growth to reaccelerate in 2Q14, following a wave of recent product launches, and we expect concerns around FCF burn to moderate, as we expect trough levels in 2014 before an above consensus ramp in 2015."

That is a pretty strong endorsement for a stock that recently plummeted more than 70% in a span of just a couple of months. In other words, Niknam believes the fears have been overblown. He's right.

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