FireEye's Q3 Is All About These 2 Things

FireEye IncFEYE

FireEye's peer Cyberark Software Ltd CYBR impressed the Street with its strong results for the third quarter, but the stock's 5 percent gain on Thursday isn't boosting Fireye's stock on Thursday, which was trading lower by nearly 1 percent.

2. Security-As-A-Service

Specifically, FireEye-as-a-Service (FaaS) aggregates and monitors the alerts from its appliances and software agents at access points including mobile, laptops, network and e-mail. The analyst is also watchful of emerging alternatives in real-time detection platforms and adjacent threat hunting solutions.

Bill Choi of Wunderlich maintains a Hold rating and $16 price target heading into to the print. In a research report on Thursday, the analyst is expecting the company's results to come in-line as estimates accurately reflect a conservative tone amidst layoffs and restructuring.

Choi is modeling FireEye to lose $0.31 per share on revenue of $182.9 million. Perhaps more importantly, the analyst is focused on two initiatives.

1. Scanner Growth

FireEye's private cloud cluster + edge scanners were released in limited quantities to 30 to 50 customers, so the analyst is looking for an update to any future broader deployment.

Choi added that he is also interested in any impact this will have to large, multi-year contracts that are due for renewal.

For existing customers, incremental investment would be the data center cluster and edge scanners, while DTI subscription and support services remain the same.

The second notable point for investors to follow is FireEye's security-as-a-service business.

FaaS billings growth slowed down as of late from 100 percent in the fourth quarter of 2015 and FaaS 2.0 is expected to re-accelerate growth as it expands the monitored alerts to include third-party products.