Wedbush Sees Solid Cybersecurity Earnings Ahead

In a new report, Wedbush analyst Steve Koenig previewed 3Q earnings for cybersecurity stocks Proofpoint and FireEye. Although Koenig reduced his price target for FireEye, he remains bullish on both stocks ahead of earnings.

Proofpoint

Proofpoint is set to release earnings on October 21. Wedbush is calling for Q3 revenue about $1 million above consensus estimates. “We believe management has created a culture of spending discipline ad structured its investment trajectory with an eye towards balancing growth with sustainable operating leverage,” Koenig explained.

According to Wedbush’s contacts within the cybersecurity space, industry incumbents Cisco Systems, Inc. CSCO and Symantec Corporation SYMC continue to lag Proofpoint in keeping up with the modern threat environment.

Related Link: The Cybersecurity ETF Long-Term View Is Bright

FireEye

FireEye has Q3 earnings scheduled for November 4. Wedbush is calling for earnings per share (EPS) of -$0.44 on revenue of $168 million, mostly in line with consensus estimates of -$0.45/$167 million.

“Although our checks indicate resellers are seeing growing competition with cheaper “add-on” solutions from firewall vendors, we think investor sentiment has become overly negative,” Koenig wrote.

Wedbush’s checks indicate that FireEye continues to be seen as the superior network-based security technology solution in the space.

Outlook

Koenig reduced Wedbush’s price target for FireEye from $63 to $41 based on the shrinking multiples of peers and increasing competition. The firm maintains its Outperform rating on both FireEye and Proofpoint.

Disclosure: The author holds no position in the stocks mentioned.