The tech sector has been under fire of late. The large-cap Nasdaq 100 is down 5% over the past month, but it’s the smaller tech stocks that are really feeling the bears’ assault.

Take newly public cyber-security software maker FireEye (Nasdaq: FEYE), for example. Shares have fallen nearly 50% since making an all-time high in early March. This decline comes on the heels of a wild surge following its September IPO.

After going public at $20 on Sept. 20, FEYE vaulted some 80% in its first trading day to close at $36. From there, the stock traded sideways for the rest of 2013, before making an outstanding run higher in early 2014, peaking at $97.35 on March 5. FEYE then reversed course and came tumbling down below $50. 

#-ad_banner-#However, on Tuesday, shares jumped as much as 7% on heavy volume. The catalyst for the buying was an upgrade from Wedbush Securities to “outperform” from “neutral.” The firm also lifted its price target on the shares to $72 from $62.

According to Wedbush, the huge pullback in FEYE since the March 5 high took place due to a combination of a wider sell-off in the tech sector, a less-than-robust secondary offering on the shares, and a disappointing report from a third-party software testing firm. 

Wedbush said it thinks the company can overcome these obstacles: “Despite these near-term challenges, our checks in the North American channel suggest that demand remains robust and that there is widespread enthusiasm for the combined FireEye/Mandiant platform, which we think will lead to upside to Q1 and 2014 revenue and billings guidance. We believe FireEye’s approach to today’s threat landscape is pragmatic and is tailored to the current needs of enterprise organizations.”

Wedbush isn’t the only one that’s bullish on FEYE. Analyst Shebly Seyrafi of FBN Securities recently initiated coverage with an “outperform” rating and a price target of $65. According to Seyrafi, “FireEye has leading-edge security technology that greatly supplements existing security defenses.” 

Unlike its bigger competitors, FEYE is currently posting large financial losses, and those losses are likely to continue for the next several years even though the company is growing at a rapid pace. Seyrafi remains bullish, writing, “We believe that investors will look past these losses as FireEye continues to post impressive growth,” but cautioning, “investor sentiment could change if growth slows more than expected.” 

From a technical perspective, I suspect today’s bounce in FEYE could propel the shares much higher. Though they may not get back to new high territory for a while, I think we could easily see a run back up above its 50-day moving average and beyond over the next six weeks.

Action to Take –>

— Buy FEYE on a break above $56 
— Set stop-loss at $51.50
— Set initial price target at $73 for a potential 30% gain in six weeks

This article originally appeared on ProfitableTrading.com:
New-Kid-on-the-Block Cyber Security Firm Looks Headed 30% Higher