FireEye Stock Puts the Squeeze on Shorts After Earnings

FEYE short sellers were in cover-mode in late 2017

by Karee Venema

Published on Feb 9, 2018 at 9:22 AM

Amid swinging stock futures, shares of FireEye Inc (NASDAQ:FEYE) have jumped 13.6% in electronic trading, after the cybersecurity company reported an adjusted fourth-quarter profit of 1 cent per share -- its first since going public in 2013 -- citing cost-cutting measures and its new subscription-based structure. FEYE also gave better-than-expected full-year guidance.

Wall Street has been quick to weigh in after FireEye earnings, too. Susquehanna, for instance, upgraded the stock to "positive" from "neutral," and joined no fewer than five other brokerage firms in raising its price target. The most optimistic came from Stifel, though, which boosted its FEYE price target to $22 from $20 -- a 56% premium to last night's close at $14.12, and territory not charted since January 2016.

FEYE shares are now set to open at their highest point since an early November bear gap, and widen their 28.2% year-over-year lead. There's ample room for more bullish brokerage notes to boost the stock even higher up the charts, too. At last night's close, 11 of 18 analysts still maintained a lukewarm "hold" rating on the equity.

Shorts are likely to get squeezed today, too, which could have them resume covering. Though short interest edged up in the most recent reporting period, it declined more than 37% from mid-August through early January. It would take bears more than seven sessions to cover the 22.14 million FEYE shares sold short, at the average pace of trading, meaning a short-covering rally could create tailwinds for the stock.

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