Imperial Capital Downgrades Barracuda Networks (CUDA) at Underperform
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Imperial Capital downgraded Barracuda Networks (NYSE: CUDA) from In-Line to Underperform with a price target of $20.00 (from $17.00) on valuation.
Analyst Michael Kim commented, "Despite our higher price target, it implies potential downside of 20% below recent levels. Based on our field checks, we anticipate continued strong growth in the core business, partially offset by weaker legacy on-premise business. We believe security demand remains healthy in the company’s target market, with a fundamental shift to cloud and virtual solutions. We received positive feedback on the company’s email security solution for Office 365, which is competing favorably against Microsoft’s basic offering, though we believe Proofpoint remains dominant with larger enterprise customers. Given the migration to cloud infrastructure and applications, we see sustained headwinds to sales of the company’s on-premise hardware appliances and attached subscriptions. In addition, we believe CUDA is facing aggressive competition in the network security market, especially from Fortinet and SonicWALL."
Shares of Barracuda Networks closed at $24.95 yesterday.
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