FireEye Inc. (NASDAQ: FEYE) is supposed to be one of the biggest would-be winners from cybersecurity. So how is it that one analyst downgrade has knocked off 5% of its value when the sector is still going to be a winner and when the stock market is up so much?

Piper Jaffray downgraded FireEye to Neutral on Monday. The biggest issue is that the firm also lowered its price target to $37 from $60 in the call. What stands out here is that the Piper Jaffray target is the street’s new lowest price target. FireEye’s lowest price target before Monday was $44, and it had a consensus analyst price target of about $54.00 prior to this call.

What has driven this decision to downgrade the stock was significantly lower earnings estimates for 2016. The driving force: excessive competition in the cybersecurity space.

One additional driving force is not just one of your traditional cybersecurity firms. Cisco Systems Inc. (NASDAQ: CSCO) was a noted threat. The networking giant, which now has a new CEO for the first time in a generation, recently held a call talking up its efforts in security and targeting security as the firm’s top priority.

The real threat from Cisco is that its offerings can effectively be added as a software upgrade. That would make Cisco’s offerings more attractive to many customers rather than having to add in new hardware and software systems.

Another issue is that recent management and executive turnover could create disruptions.

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There is one other issue to consider here, and that goes above and beyond excessive valuations. FireEye has been considered to be a great company doing what it does. The problem is that FireEye’s explosive revenue growth (up well over 100% in 2014) has yet to generate a profit, and the higher revenue came with a higher net loss applicable to common shareholders.

If you want the proof, FireEye’s shareholder loss was $443.8 million in 2014 (a loss of $1.97 per share) on $425.6 million in sales. In 2013, it lost $120.6 million on sales of $161.5 million. To make matters worse, FireEye is expected to post a loss in 2015 and 2016, with Thomson Reuters predicting -$1.73 per share in 2015 and -$1.36 per share in 2016. That high level of losses is despite a 50% expected revenue growth in 2015 and 37% in 2016.

24/7 Wall St. wanted to look for recent analyst calls elsewhere to what was said about FireEye and peers regarding competition and regarding the sharp pullback seen in some of these leaders.

Merrill Lynch maintained its Buy rating and $60 price objective back on September 3. It said:

We continue to favor the sector and reiterate our Buys on Check Point, Fortinet, FireEye, CyberArk and Barracuda. On the negative side, we note high street expectations with stocks recently trading down on solid quarters. The recent sector sell-off may have eased some of these concerns, providing a particularly good buying opportunity for investors, in our view.

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On FireEye’s own strength and weakness, that Merrill Lynch report from a month ago said:

The stock still carries a higher valuation than most security peers, and it also grows faster. We believe a premium to the peer security group is warranted, given the disruptive nature of FireEye’s technology, strong growth prospects, and technical advantages. … The risk is competition from existing IT security vendors, a high expense structure designed to leverage the early lead and capture new opportunities, high valuation that could come under pressure should there be a market correction, and reputational risk if FireEye’s products fail to meet customer expectations.

FireEye shares were down 6.5% at $30.92 in midday trading on Monday. Its 52-week range is $24.81 to $55.33, and its market cap is $4.95 billion.

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