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FireEye Stock Continued to Lose Market Value in May

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FireEye stock returns

FireEye (FEYE) has continued to burn investor wealth. The stock is down 9.4% since the start of May 2019 and has declined 10.5% this year. FireEye stock began trading as a publicly listed company back in September 2013. The stock rose from $36.0 that month to almost $88.0 in March 2014. FireEye stock has since fallen over 83.0% resulting in massive investor losses.

Investors have been concerned about FireEye’s decelerating revenue growth. Its sales had risen by 64.0% annually between 2013 and 2016. FireEye’s sales then rose just 5.2% in 2017 and by 10.7% in 2018. Analysts expect the company’s sales to rise by 7.5% annually in the next three years.

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FireEye revenue drivers

In the first quarter, FireEye experienced growth across its email security, Endpoint security, and Network Security business segments. This growth was offset by a decline in the company’s appliance hardware sales. FireEye’s cloud subscriptions and managed services sales experienced growth of 16.0% year-over-year.

FireEye was also optimistic about its customer retention rate, and its ARR (annual recurring revenue) rose 8.0% to $550 million. In the second quarter, FireEye estimated sales between $212 million and $216 million. This is in line with Wall Street sales estimates of $214.5 million.

Is the stock undervalued?

Has the massive erosion in FireEye stock price over the years made it an attractive pick for investors? FEYE stock is trading at a forward PE multiple of 46.8x. In comparison, its earnings are estimated to rise by an impressive 137.5% this year and by 63.2% in 2020.

Its earnings are also expected to rise at a CAGR (compound annual growth rate) of 77.7% over the next five years. FireEye stock still looks grossly undervalued considering the PE multiple.

How does Wall Street view FireEye?

Out of the 29 analysts tracking FireEye, 11 recommend a “buy,” 17 recommend a “hold,” and one recommends a “sell.” The analysts have an average target price of $20.0 which indicates that the stock has an upside potential of 38.0% from current levels.

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