Morgan Stanley Believes Solid Quarter Should Build Investor Confidence In Barracuda Networks

In a report published Friday, Morgan Stanley analyst Keith Weiss reiterated an Overweight rating and $40.00 price target on

. In the report, Morgan Stanley noted, “Sustaining 17% YoY billings growth against a 5% point more difficult comp, highlighted another solid quarter from Barracuda Networks. Trailing twelve-month (TTM) adjusted FCF is up 58% YoY, on the back of a better than expected Q1, and the adjusted FCF margins (TTM adj. FCF/TTM Billings) rose 360 bps, showing the strong leverage in the model as Barracuda sees the yields from recent investments. The diversity of revenue streams again helped sustain good growth trends, as continued strength in the Storage and Application/Network Security segments offset fluctuations in the content security market. "Looking forward, Barracuda continues to add diversity in 1) their go-to-market model, with distribution partner Arrow Enterprise ramping well, 2) delivery models, as the number of cloud customers (using Azure or AWS) continues to ramp from 40 in Q4 to well north of 100 in Q1, and 3) the product portfolio, with new products like Copy and Sign beginning to ramp (over 5 million combined subscribers) and product enhancements across the portfolio. This continuing broadening of both the market opportunity (new product) and distribution capability (partners and delivery model) bolsters our confidence in the sustainability of Barracuda's high-teen growth profile.” Barracuda Networks closed on Thursday at $34.00.