Why Sourcefire Shares Were on Fire

Is this meaningful, or just another movement?

Evan Niu
Evan Niu, CFA
Feb 22, 2013 at 3:49PM
Technology and Telecom

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: Shares of Sourcefire (UNKNOWN:FIRE.DL) were on fire today, rallying by as much as 17% after the company reported earnings.

So what: Revenue in the fourth quarter increased 27% to $67.4 million, well ahead of the consensus forecast of $63.8 million. The company posted adjusted net income of $8.9 million, or $0.29 per share, which was right on target with expectations. CEO Marty Roesch said the company's threat-centric strategy continues to be an important differentiator.

Now what: Sourcefire's revenue forecast was also better than expected, with first-quarter sales predicted to be $56 million to $58 million. The Street was modeling for just $55.3 million. Following the results, Topeka Capital upgraded its rating on the stock from "hold" to "buy" with a $50 price target. Topeka noted that the results dispel recent fears that government and Europe, Middle East, and Africa business was suffering.

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