Sourcefire Goes Public

Network security software company Sourcefire(FIRE - Cramer's Take - Stockpickr) 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 - Cramer's Take - Stockpickr) and even Cisco(CSCO - Cramer's Take - Stockpickr) 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 - Cramer's Take - Stockpickr). Check Point had offered to buy the company for $225 million but the deal fizzled out.