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March 5, 2020, 4:52 p.m. EST

FireEye stock scores Goldman Sachs post-RSA upgrade, while Check Point gets downgraded

Other Goldman favorites include Palo Alto Networks, Fortinet, Zscaler

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By Wallace Witkowski, MarketWatch


MarketWatch photo illustration/iStockphoto
Goldman Sachs said FireEye was one of the few “opportunities” arising from the RSA cybersecurity conference.

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 /zigman2/quotes/204730283/composite FEYE +1.38%  shares closed up 5% at $14.59, following an intraday high of $14.61, 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 /zigman2/quotes/207892345/composite HACK +1.45%  fell 2.9%, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.61%  dropped 3.4% and the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.87%  declined 3.1%.

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 11%, 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. /zigman2/quotes/200866016/composite CHKP +1.17%  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 3.3% to close at $100.58, 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. /zigman2/quotes/207599953/composite PANW +1.57%  even as recent earnings disappointed given that his “surveys, conversations at RSA pointed to market share gains relative to peers.” Palo Alto Networks shares finished down 2.6% at $181.05.

Other stocks well-positioned following RSA, according to Essex, are Fortinet Inc. /zigman2/quotes/205733290/composite FTNT +0.43%  and Zscaler Inc. /zigman2/quotes/203585803/composite ZS +0.11% . Fortinet shares declined 2.9% to close at $104.00, while Zscaler shares slipped less than 0.1% to close at $53.36.

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. /zigman2/quotes/207732364/composite MSFT +0.78%  told employees to work from home where coronavirus has been reported, while shares of Zoom Video Communications Inc. /zigman2/quotes/211319643/composite ZM -1.78% continued to benefit from a growing fear of face-to-face meetings.

One of the other few cybersecurity gainers Thursday was Cloudflare Inc. /zigman2/quotes/214109260/composite NET +2.10%  , with shares closing up 2.9% at $23.35. Cloudflare recently said its new generation of servers would not use any chips from Intel Corp. /zigman2/quotes/203649727/composite INTC +2.98% , opting instead for chips made by Advanced Micro Devices Inc. /zigman2/quotes/208144392/composite AMD +1.83%  .

/zigman2/quotes/204730283/composite
US : U.S.: Nasdaq
$ 12.86
+0.18 +1.38%
Volume: 2.23M
Sept. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.86 billion
Rev. per Employee
$259,672
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/zigman2/quotes/207892345/composite
US : U.S.: NYSE Arca
$ 46.90
+0.67 +1.45%
Volume: 58,164
Sept. 28, 2020 4:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,351.60
+53.14 +1.61%
Volume: 2.22B
Sept. 28, 2020 5:06p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
11,117.53
+203.96 +1.87%
Volume: 3.22M
Sept. 28, 2020 5:16p
loading...
/zigman2/quotes/200866016/composite
US : U.S.: Nasdaq
$ 121.60
+1.41 +1.17%
Volume: 820,690
Sept. 28, 2020 4:00p
P/E Ratio
21.37
Dividend Yield
N/A
Market Cap
$16.85 billion
Rev. per Employee
$418,810
loading...
/zigman2/quotes/207599953/composite
US : U.S.: NYSE
$ 245.94
+3.80 +1.57%
Volume: 972,494
Sept. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$23.34 billion
Rev. per Employee
$484,742
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/zigman2/quotes/205733290/composite
US : U.S.: Nasdaq
$ 117.31
+0.50 +0.43%
Volume: 926,250
Sept. 28, 2020 4:00p
P/E Ratio
49.11
Dividend Yield
N/A
Market Cap
$18.90 billion
Rev. per Employee
$308,161
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/zigman2/quotes/203585803/composite
US : U.S.: Nasdaq
$ 138.42
+0.15 +0.11%
Volume: 1.73M
Sept. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$18.38 billion
Rev. per Employee
$231,369
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/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 209.44
+1.62 +0.78%
Volume: 32.00M
Sept. 28, 2020 4:00p
P/E Ratio
36.36
Dividend Yield
1.07%
Market Cap
$1572.71 billion
Rev. per Employee
$902,473
loading...
/zigman2/quotes/211319643/composite
US : U.S.: Nasdaq
$ 487.66
-8.84 -1.78%
Volume: 17.62M
Sept. 28, 2020 4:00p
P/E Ratio
627.70
Dividend Yield
N/A
Market Cap
$141.22 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/214109260/composite
US : U.S.: NYSE
$ 40.88
+0.84 +2.10%
Volume: 3.24M
Sept. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$12.24 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 51.43
+1.49 +2.98%
Volume: 29.65M
Sept. 28, 2020 4:00p
P/E Ratio
9.46
Dividend Yield
2.57%
Market Cap
$212.39 billion
Rev. per Employee
$659,665
loading...
/zigman2/quotes/208144392/composite
US : U.S.: Nasdaq
$ 79.48
+1.43 +1.83%
Volume: 48.01M
Sept. 28, 2020 4:00p
P/E Ratio
155.60
Dividend Yield
N/A
Market Cap
$91.64 billion
Rev. per Employee
$641,089
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Wallace Witkowski is a MarketWatch news editor in San Francisco. Follow him on Twitter @wmwitkowski.

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