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FireEye rises as analyst praises its technology

NEW YORK (AP) -- Shares of FireEye rose Thursday after an analyst started covering the computer security software company with a positive rating, saying its acquisition of cybersecurity company Mandiant creates a major opportunity.

THE SPARK: Analyst Jonathan Ho of William Blair & Co. initiated coverage with a rating of "Outperform." He said older malware products are becoming outdated and FireEye is the first company that has been able to build a solution that can stop advanced persistent threats, or malware that can avoid detection and target data over long periods of time. He added that the company will be able to enter several new product categories now that it has acquired Mandiant.

"Because FireEye's technology is fundamentally different from traditional, signature-based detection, we view the company's offerings as a new class of technology," he wrote. That means its products won't be subject to the limits and problems that affect older products.

THE BIG PICTURE: FireEye announced on Jan. 2 that it had acquired Mandiant Corp. for about $1 billion in cash and stock. Milpitas, Calif.-based FireEye said the deal would increase its ability to stop attacks in their early stages. FireEye said the companies formed a strategic partnership in early 2012 and they had been offering integrated products since early 2013.

Mandiant, based in Virginia, is well known for linking years of cyberattacks against U.S. companies to a secret Chinese military unit.

FireEye also raised its fourth-quarter forecast, saying its revenue would be between $55 million and $57 million instead of $52 million to $54 million. At the time analysts expected $53.4 million, according to FactSet.

FireEye now expects to report $400 million to $410 million in revenue in 2014. Before it bought Mandiant it expected $240 million to $250 million.

Analysts are now forecasting $406.3 million in revenue on average.

SHARE ACTION: FireEye Inc. shares rose $5.55, or 8.5 percent, to $71 in afternoon trading, and they reached a high of $71.53. The company went public in September with an IPO that priced at $20 per share and raised about $304 million. The shares are up 50.1 percent in 2014.