FireEye's Turnaround Is Clearly Underway After Q2 Beat

FireEye Inc (NASDAQ: FEYE) reported Tuesday a better-than-expected earnings report, which not only propelled shares higher by 7 percent, but the company confirmed a turnaround story is "starting to see some traction," at least according to analysts at BTIG. The firm's Joel Fishbein maintains a Buy rating with a price target boosted from $17 to $18.

Granted, FireEye is performing well against a "relatively low bar" after a challenging period, the company's second quarter earnings report were still ahead of consensus estimates, Fishbein stated. Specifically, the earnings report showed:

1. An improvement in the "right sizing" of the cost structure.
2. A more streamlined and solution oriented portfolio of products.
3. A "go to market refocus."

On the other hand, the cybersecurity company's billings performance in the quarter wasn't "pretty" but is mostly weighed down by falling duration while the overall descent is "leveling off," the analyst added. Also, there are still some question marks as to what degree new products will convert to sales although "initial indicators appear promising."

Looking forward, the next milestone for FireEye would be showing continued growth and profitability in the fourth quarter, Fishbein continued. In fact, two quarters of strong performance should bring the company closer to profitability in the fourth quarter and should also drive shares higher.

"Growth plus profitability combined with a deeply depressed valuation lead to a favorable set up, in our view," Fishbein concluded.

At last check, shares of FireEye were up 7.08 percent at $15.73 in Wednesday's pre-market session.

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