D.A. Davidson Downgrades Barracuda Networks As Shares Surpass Price Target

D.A. Davidson downgraded Barracuda Networks Inc CUDA to Underperform from Neutral with a 12-month price target of $19.50 (up from $17), given the 42 percent upside in shares since reporting first quarter earnings.

The brokerage said the company's organic growth rate is clearly slowing. For the first quarter, year-over-year growth was just 11 percent, including inorganic growth contributed by the Intronis acquisition versus last year's sequential revenue growth of 8 percent, with revenue up 18 percent year-over-year.

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The slower growth was attributed to the company's loss of market share to public cloud providers such as Amazon.com, Inc. AMZN, Alphabet Inc's GOOGL Google, and Microsoft Corporation MSFT.

"We see no indication that this headwind will abate," analyst Mark Kelleher wrote in a note.

Though Barracuda's cloud-based solutions are ramping quickly, the analyst said the transition will likely create a headwind to overall growth for some time.

Shares of Barracuda Networks closed Thursday at $22.08.