FireEye (MNDT) stock has struggled so far this year as investors have decided to dump shares of the cybersecurity specialist thanks to the company's habit of delivering weak guidance numbers over the past couple of quarters.

FireEye started the year on a negative note after the company's first-quarter guidance fell short of expectations. The trend continued in the next quarter when its guidance turned out to be underwhelming once again. But professional investing community SumZero believes that FireEye is a misunderstood stock that could double within the next couple of years (via Barron's).

Hand drawing stock chart return.

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What SumZero likes about FireEye

SumZero credits FireEye management for turning it from "cash-burning hypergrowth to a now-stabilized business with more-predictable recurring revenue streams." SumZero is right on the money on this point, as FireEye's operating cash flow is in firmly in positive territory thanks to its control over costs.

FEYE Cash from Operations (TTM) Chart

FEYE cash from operations (TTM) data by YCharts

FireEye has managed to drastically reduce the money it spends on selling, general, and administrative expenses over the years. This has allowed the company to move closer toward profitability. So there's no doubt that FireEye has actually improved over time. But this is not where SumZero's bullishness ends.

SumZero cites that cybersecurity spending is expected to grow at an annual rate of 8% in the coming years, and believes that FireEye is on track to take advantage of this growth. SumZero goes on to state: "Such tailwinds should bode well for FireEye, as the company has managed to be at the forefront of some of the biggest hacking stories in the last few years, including Target, Sony, JPMorgan Chase, and Anthem."

But FireEye's mere presence in the cybersecurity space doesn't guarantee success and financial growth, and this is where SumZero's thesis loses ground. FireEye is one of the many players having a go at the cybersecurity opportunity, and a closer look at its recent financial performance indicates that it isn't on top of the game.

Stepping off the gas

FireEye anticipates revenue of $885 million this year, up 6.5% from the prior-year period. For comparison, FireEye's top line increased 7% last year. So the growth in cybersecurity spending won't be moving the needle for FireEye this year, as SumZero expects.

Now, there are two reasons why I believe FireEye is unable to take advantage of growing cybersecurity spending.

First, the company isn't spending aggressively on research and development anymore in a bid to boost earnings. FireEye's outlay on R&D has slowed down remarkably over the years, while key rival Palo Alto Networks (PANW 0.34%) has started boosting its spending on this line item of late.

FEYE R&D to Revenue (TTM) Chart

FEYE R&D to revenue (TTM) data by YCharts

This doesn't paint a good picture because the cybersecurity space is a competitive one where both big and small companies are trying to make a dent. Palo Alto, for instance, has spent more than $1 billion on five acquisitions since the beginning of 2017 to branch into different cybersecurity niches and secure long-term growth.

But FireEye has not been as aggressive. It spent $250 million to acquire Verodin in May this year, but this move isn't going to move the needle much for the company. FireEye estimates that Verodin will add only $20 million to its billings this year and $70 million next year.

On the other hand, Palo Alto Networks' acquisitions are turning it into a well-oiled, integrated cybersecurity platform, giving the company ample opportunity to cross-sell its existing solutions to new customers, and new solutions to existing customers. This is evident from the fact that Palo Alto customers are now spending more money on its solutions, which is leading to strong margin and revenue improvements when compared with FireEye.

PANW Operating Margin (TTM) Chart

PANW operating margin (TTM) data by YCharts

In the end, FireEye has a tepid revenue growth forecast for 2019, and its top line isn't expected to gather much momentum next year, either. Of course, the company is witnessing improvements on the bottom line and the cash flow, but its conservative approach could prove costly in the long run.

FireEye is taking its foot off the gas as far as R&D spending is concerned, while rivals are taking an aggressive approach to corner a bigger share of this market. This is why the probability of FireEye stock's doubling in the next couple of years remains weak.

The company needs to find ways to boost its top line. Otherwise, it could cede ground to rivals in the cybersecurity space and continue lagging the stock market as it has in the past three years.