Barracuda Networks Inc (NYSE: CUDA) shares plunged 9.5 percent on Monday as JMP Securities' Erik Suppiger downgraded the stock from Market Perform to Market Underperform, the firm's equivalent of a Sell rating.
Suppiger holds a $13 price target on shares of Barracuda Networks, about 18 percent below the $15.79 Monday closing price.
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The JMP analyst cited "a challenging May quarter, despite improving investor sentiment with the shares up ~80% since January."
"Our industry discussions suggest sales momentum has deteriorated in recent months, driven, in large part, by the accelerating move to cloud adoption," Suppiger said. The analyst noted three major takeaways from recent checks:
- "the trend toward cloud, particularly Office 365, continues to put incremental pressure on sales momentum;
- the company has experienced both voluntary and involuntary turnover, which has been disruptive to sales; and
- while Barracuda is rumored to be seeking strategic alternatives, we think it will be difficult for management to find a buyer at the current valuation."
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