Sourcefire (FIRE) Q1 Results 'Better than Feared' - Needham & Company

May 1, 2013 10:55 AM EDT Send to a Friend
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Price: $75.96 --0%

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    4 Buy, 16 Hold, 0 Sell

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    Up: 13 | Down: 18 | New: 41
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Needham & Company reiterated its Buy rating and $65 price target on Sourcefire (NASDAQ: FIRE) following Q1 results that were better than feared.

Analyst Scott Zeller said, "The FIRE MarQ narrow miss is a relief and "better than feared" given the recent disappointing results from CHKP (HOLD) and FTNT (HOLD) among others; shares eased -6% yesterday intraday going into earnings on sector trepidation. However, the urgency among IT buyers for the FIRE-type solutions in network security is driving secular growth – as evidence, the commercial business was +40% y/y, and International revenue was +32% y/y, suggesting strength across verticals and a solid Europe."

He continued, "Sourcefire's products are seeing strong demand, in our view because of their complementary nature to other newer technologies such as PANW (BUY) in a “next gen firewall” architecture driving secular spending strength. The weak spot in the quarter was Federal, which was $6.2m and -37% y/y; investors are looking past the Fed MarQ, though, as it is a shrinking component of revenues (11% of total revs MarQ), and management expects a strong SeptQ seasonal flush in Federal. FIRE reiterated "at least 25%+" top line revenue growth and "flat y/y" operating margins, comforting investors in a season where several companies have disappointed."

"New CEO John Becker signaled in his comments that he would continue the playbook handed to him; we anticipate solid execution in 2H13, driven by secular demand for FIRE, and a healthy VAR ramp-up program. Reiterate BUY and $65 target, estimates unchanged for CY13. Our $65 target is 5x EV/CY14 revenue."

For an analyst ratings summary and ratings history on Sourcefire click here. For more ratings news on Sourcefire click here.

Shares of Sourcefire closed at $47.76 yesterday.


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