BofA Merrill Lynch Downgrades Barracuda Networks to Neutral from Buy, Raises PO to $39.50 from $26.00

In a report published Friday, Bank of America Merrill Lynch analyst Tal Liani downgraded Barracuda Networks, Inc.

, raises price objective to $39.50 from $26.00. According to the report, although BofA analysts raise estimates and increase price objective, however, valuation considerations prompt them to downgrade their rating after 95 percent run up since its IPO. “On the fundamentals front, we see progress on all sides,” the report noted. “The company is leveraged to the SMB market, which is benefiting from stronger GDP momentum in 2014. Its content security business (44% of billings) is showing signs of acceleration, following new product launches, and it is gaining share in storage, growing 30-40% YoY. Its participation in cloud initiatives also shows progress, with traction at Microsoft Azure and Amazon AWS. Lastly, the company continues to invest in its go-to-market strategy, both domestically and internally and the addition of Arrow should help the pipeline.” The new price objective reflects the analyst's favorable views on the fundamentals and the valuation level of the security segment, coupled with valuation of companies that carry a similar growth/gross margin profile. CUDA closed Thursday at $34.83 with shares trading down at 10.69 percent.