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FireEye Inc. was one of the few cybersecurity stocks showing gains Thursday amid a broader market selloff after Goldman Sachs upgraded the stock following information gathered at the sector’s largest trade show last week.
FireEye FEYE, +3.74% shares rose 3.5% to $14.38 in recent trading, after touching an intraday high of $14.55, after Goldman Sachs said the stock was one of the few “opportunities” arising from the RSA cybersecurity conference in San Francisco.
In comparison, the ETFMG Prime Cyber Security ETF HACK, -3.27% fell 3.2%, while the S&P 500 index SPX, -3.65% dropped 3.5% and the tech-heavy Nasdaq Composite Index COMP, -3.19% declined 3%.
Goldman Sachs analyst Brian Essex upgraded FireEye to a buy from neutral with a price target of $18 given the stock’s outsized pullback relative to its peers and expectations for revenue to “reaccelerate.”
Over the past three months, FireEye shares are down 12% even with Thursday’s gains, compared with a 3.8% decline in the HACK cybersecurity ETF.
“Additionally, expenses have recently been elevated due to the company’s ongoing platform transition (from software to hardware, from product to subscription) and the company pointed to plans to rationalize costs associated with the declining portion of its business,” Essex said.
Read:FireEye’s Sandra Joyce on ‘a concerted influence operation’ on U.S. elections, and more
On the other hand, Essex downgraded Check Point Software Technologies Ltd. CHKP, -3.55% to sell from neutral with a price target of $100 on the basis that the company’s declining market share has yet to improve given his checks at the RSA conference.
“While software subscriptions have grown double-digits, investors have expressed concern over maintenance growth which accounts for a substantial portion of CHKP’s revenue, and maintenance remains at risk if the company continues to lose market share,” Essex said.
Check Point shares declined 3.4% to $100.48, after touching an intraday low of $99.41.
Read:What if it was the Marvel Cybersecurity Universe?
Goldman’s Essex also reiterated his buy rating on Palo Alto Networks Inc. PANW, -2.71% even as recent earnings disappointed given that his “surveys, conversations at RSA pointed to market share gains relative to peers.”
Other stocks well positioned following RSA, according to Essex, are Fortinet Inc. FTNT, -2.73% and Zscaler Inc. ZS, +0.15%
Essex also said the COVID-19 coronavirus will likely place more focus on infrastructure that allows remote workstations.
“Elevated news around COVID-19 during the conference heightened awareness of the benefits of cloud and remote computing from a business continuity perspective,” Goldman’s Essex said.
On Thursday, Microsoft Corp. MSFT, -2.19% told employees to work from home where coronavirus has been reported, while shares of Zoom Video Communications Inc. ZM, +7.04% continued to benefit from a growing fear of face-to-face meetings.
One of the other few cybersecurity gainers Thursday was Cloudflare Inc. NET, +2.46% with shares up 2.8%. Cloudflare recently said its new generation of servers would not use any chips from Intel Corp. INTC, -2.72%, opting instead for chips made by Advanced Micro Devices Inc. AMD, -4.15%
