Sourcefire Goes Public

Network security software company Sourcefire(FIRE) debuted on Wall Street to an enthusiastic reception from investors who have seen scant offerings from IT security companies in the last three years.

Shares of Sourcefire opened at $15 and rose $1.05, or 7%, to $16.05. With an initial offering of 5.8 million shares, the company is looking to raise $74.2 million from its IPO.

"With an enterprise value to trailing revenue multiple of approximately 5.8 times, Sourcefire is trading above the average multiples for both large-cap and small-cap public security companies," says Charlie Rice, principal with boutique investment banking firm East Peak Advisors.

Rice estimates that most large-cap IT security companies have a trailing revenue multiple of just under five times, while small-cap players have multiples that hover around 3 times.

Sourcefire's market capitalization after debuting is estimated to be around $346 million.

What sets Sourcefire apart from larger rivals such as McAfee(MFE) and even Cisco(CSCO) is that it uses an open-source-based technology called Snort to detect and prevent intrusions on networks. Founded in 2001, Sourcefire had raised approximately $54 million in venture funding.

Before its IPO filing, the Columbia, Md.- based Sourcefire attempted to be acquired by Check Point Software(CHKP). Check Point had offered to buy the company for $225 million but the deal fizzled out.