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Goldman Sachs analyst Sarah Friar yesterday morning cut her rating on security software maker Secure Computing (SCUR) to Sell from Neutral. With the stock up 24% since it reported fourth quarter earnings, she wrote in a research note, “investors are currently pricing in flawless execution going forward.”

But she says that there are indications of weakness in public sector IT spending, which accounts for 16%-17% of the company’s revenue. Friar says weak government spending could result in weaker-than-expected first quarter results.

Friar also notes that the stock trades at a substantial premium to the software group, at 73.6x enterprise value/adjusted free cash flow, versus 19x for the overall software group.

Friar’s price target on the stock is $7.

Secure shares yesterday were down 49 cents at $7.81.

SCUR 1-yr chart

scur chart