Sourcefire Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Network security firm Sourcefire (Nasdaq: FIRE  ) was caught in market crossfire today, falling as much as 30.7% in intraday trading before recovering to a more modest 23% crash.

So what: The third-quarter report Sourcefire filed last night was better than expected, but the outlook for the fourth quarter was far weaker than the average analyst was hoping for. The maker of the Snort intrusion detection software package says revenue should inch up slightly in the next period while earnings drop from current levels.

Now what: Good results plus weak outlook equals a big drop -- I think we've heard this song before. Perhaps it's just a case of analysts getting ahead of themselves in sheer excitement over buyouts in the security sector, in which case this drop is more of a readjustment to reality. All told, this stock has still gained 29% over the past three months, beating rivals Check Point Software (Nasdaq: CHKP  ) by a nose and Symantec (Nasdaq: SYMC  ) by a mile.   

Interested in more info on Sourcefire? Add it to your watchlist by clicking here.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Check Point Software Technologies is a Motley Fool Rule Breakers selection. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.


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