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FireEye (FEYE) to Post Q4 Earnings: What's in the Offing?

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FireEye FEYE is set to report fourth-quarter 2019 results on Feb 5.

For fourth-quarter fiscal 2020, the company projects revenues between $224 million and $228 million. The Zacks Consensus Estimate for revenues stands at $226.5 million, implying 4.1% growth from the year-ago quarter’s reported figure.

The company also projects non-GAAP earnings between 3 cents and 5 cents per share. The midpoint of 4 cents matches the consensus mark, suggesting a 33.3% year-over-year decline.

Notably, the company’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters, missed it once and matched the same once, with the negative surprise of 20%, on average.

Let’s see how things are shaping up for the upcoming announcement.

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Factors at Play

FireEye’s upcoming quarterly results are expected to have continued to benefit from solid demand for its products, given the healthy environment of the global security market.

Moreover, strong traction in Mandiant Professional Services revenues is expected to have aided the upcoming results. Notably, the company integrated Verodin into Mandiant Services and introduced services such as the Purple Team offerings in early October. Mandiant Services engagements, powered by the Verodin platform, began gaining adoption soon. These are likely to have been tailwinds for the Mandiant Professional Services segment during the fourth quarter.

Further, continued momentum in Helix, Intel, and cloud e-mail and endpoint is expected to have been a tailwind. In the last reported quarter, FireEye added several capabilities to the Helix platform. This is likely to have attracted customers in the to-be-reported quarter.

Billings are projected in the range of $285-$295 million. The Zacks Consensus Estimate for billings stands at $290 million, indicating a 9.4% year-over-year increase. Management expects the platform, cloud subscription and managed services category to have contributed significantly to the year-over-year growth.

Besides, non-GAAP operating margin is estimated in a band of 3-5%, suggesting a sequential decline in operating expenses accruing to lower payroll taxes and cost-optimization activities completed in the third quarter.

However, the second quarter is not expected to have witnessed any transactions worth $10 million or more.

Further, an expected year-over-year decline in product and related subscriptions and support revenues might have been a dampener.

Also, service revenues are expected to be more or less flat sequentially due to fewer potential billable hours in the fourth quarter owing to the holidays.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for FireEye this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FireEye has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +10.80% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks PANW has an Earnings ESP of +1.18% and a Zacks Rank #3.

Check Point Software Technologies (CHKP - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank of 3.

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