After a string volatile quarters, FireEye Inc (NASDAQ:FEYE) is starting to get back on track.
FireEye just announced its latest earnings report, and it looks like the company had little trouble selling its cloud-based security offerings. Revenues soared 150% to $143 million, which beat the Street consensus of $141.4 million.
Oh, and the outlook was also encouraging. For the current quarter, the company forecasts revenues of $118 million to $122 million, in line with analysts’ consensus of $121.1 million.
FireEye stock got a nice boost from the earnings report. So far in today’s trading, the shares are up about 11% on heavy volume.
Granted, the FireEye earnings report had lots of red ink. In the current quarter, the adjusted net loss was 38 cents per share, which was more than the Street estimate of 35 cents per share.
FireEye Stock Has a Bright Future
But these losses aren’t anything to get overly concerned about. Keep in mind that FEYE has been investing aggressively in building a world-class infrastructure, which includes a network of more than 9 million virtual machines and 4 million endpoints that crunch 50 billion objects every day. This system allows for real-time monitoring, which is crucial for dealing with today’s complex cyberthreats.
It also helps that FEYE keeps innovating its product line. After all, it provides protection from all major platforms like those from Microsoft Corporation (NASDAQ:MSFT) to Apple Inc (NASDAQ:AAPL) to the myriad of cloud operators.
No doubt, cybersecurity is rapidly becoming a key priority for executives. Just look at frequency of high-profile hacks at companies like Sony Corp (NYSE:SNE), Target Corporation (NYSE:TGT) and Anthem, Inc. (NYSE:ANTM). (By the way, all of those companies hired FEYE to handle the response to the breaches.)
But it also looks like FireEye stock could also get a lift from the mobile market, which appears to be the next frontier for hackers. Let’s face it, the footprint is massive, and smartphones are starting to handle more financial transactions. For FEYE, the company has been investing to leverage its infrastructure to deal with the potential threats. The company has also struck high-profile partnerships with companies like Verizon Communications Inc. (NYSE:VZ).
Now it’s true that FireEye stock is far from cheap, with a price-to-sales ratio of about 16. But you’ll find high valuations in just about any major cloud operator. Besides, FEYE still has tremendous growth opportunities — and more importantly, has a strong infrastructure and product road map.
For the most part, it is usually a mistake to jump in when the enthusiasm is at fever pitch. And as FEYE stock has shown, there is often a pullback that provides a better buying opportunity — like FEYE stock’s September and November drops. All things considered, it’s still probably best to wait a bit before buying FireEye stock.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
