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Why FireEye Inc. Shares Bounced Back Today

By Brian D. Pacampara, CFA – Feb 16, 2016 at 4:02PM

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Shares of the cybersecurity specialist bounced on Tuesday. But is the rebound sustainable?

What: Shares of cybersecurity technologist FireEye Inc. (MNDT) were up 11% at 2:52 p.m. ET on Tuesday, one trading day after the stock slumped on earnings.

So what: FireEye shares fell about 5% this past Friday on mixed Q4 results and guidance, but today's double-digit bounce -- on relatively no news -- suggests that Mr. Market just needed the long-weekend to digest the tasty parts of the report. After all, despite providing downbeat Q1 earnings guidance, FireEye remains on the path to profitability as evidenced by steadily improving operating margins, giving investors good reason to bet on a relatively quick turnaround today. 

Now what: Looking ahead, management sees billings of $975 million-$1.055 billion, revenue of $815 million-$845 million, and positive cash flow from operations of $70 million-$80 million. "We achieved a significant milestone on our path to profitability, with positive operating cash flow of $37.0 million for the year as billings growth exceeded growth in non-GAAP operating expenses," said Vice President and CFO Michael Berry in last week's report. "Based on our 2016 guidance for billings and non-GAAP operating expenses, and anticipated capital expenditures, we expect to achieve positive operating and free cash flow for the year." Of course, with the shares still off a staggering 75% from their 52-week highs, FireEye still has a long way to go to fully regain Wall Street's confidence. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of and recommends FireEye. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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