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FireEye (FEYE): What's in Store for the Stock in Q2 Earnings?

FireEye Inc. FEYE is set to report second-quarter 2016 results on Aug 4. Last quarter, the company posted a narrower-than-expected loss. Let’s see how things are shaping up for this announcement.

Factors at Play

FireEye, headquartered in Milpitas, CA, is a global provider of web, email, file and malware security to both enterprises and governments. Near-term prospects for FireEye are not very promising as the impact of changing customer spending behavior has already been reflected in the quarterly results of several other players in this space.

During the second quarter, it was noted that companies in this space have been breaking their cybersecurity investment plans in phases and implementing the same over a longer duration of time, instead of making a single large investment.

As a result, we are concerned that 2016 spending may fall to 2014 levels. Notably, cybersecurity spending by these companies skyrocketed last year due to a series of high-profile security breaches.

Furthermore, we have recently been noticing that FireEye is losing business to its rivals. In spite of witnessing year-over-year revenue growth, the top line has missed the Zacks Consensus Estimate in each of the three trailing quarters. On the other hand, rivals such as Fortinet Inc. and Palo Alto Networks Inc. PANW reported revenues that were not only...