Sourcefire (NASDAQ:FIRE) May be Stronger Acquisition Target

Change in their strategy in regard to their “Next Generation Firewall" has Sourcefire (NASDAQ:FIRE) positioned stronger as a possible takeover target.

Needham says, "We recently caught up with Sourcefire management following an investor event on Dec 9th that clarified questions raised on the October conference call. The recent product strategy for “Next Generation Firewall” (broadening the FIRE product) was clarified and is logical, based on our discussion with network security industry contacts, and may make FIRE more attractive as an acquisition target. We also heard clarification that changes to the revenue model (flirting with subscription pricing) are not expected to have material impact for several quarters. That said, we believe our cost profile for CY11 needs to be more front-end loaded to account for increased S&M and R&D in 1H11, due to new product launch (R&D plus S&M/channel spend)."

Needham & Company maintains a "Buy" rating on Sourcefire, which closed Thursday at $26.03, up $0.82, or 3.25 percent. They raised their price target on them from $28 to $32.