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.
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.