Morgan Keegan Lowers Estimates On Sourcefire Due To Lack Of Visibility

In Morgan Keegan's opinion, actions within the House of Representatives and the Senate suggest that 2011 may be a year of ongoing continuing resolution, given the six short term CRs that have already been approved this fiscal year, and the lack of any material movement forward on a final Budget resolution. As a result, Morgan Keegan believes it is increasingly likely that SourceFire's FIRE Federal revenue in 2011 will decline.

Morgan Keegan is reducing its FY11 revenue estimate to $150.2 million from $156.6 million, to reflect a decline in Federal revenues of 16% versus its previous assumption of flat Y/Y growth. The assumption for commercial and international growth Y/Y in FY11 of 25% is unchanged. As a result of the escalating cybersecurity threat environment, IPS mindshare is growing and SourceFire remains well positioned for share gains and to capitalize on the large, adjacent opportunity in the next generation firewall market.

Morgan Keegan reiterates its Outperform rating and $33 PT on FIRE.

FIRE closed Wednesday at $25.28