Pacific Crest Sees Opportunity in Barracuda Networks (CUDA) Following Q1 Billings 'Miss'

Pacific Crest maintained an Overweight rating on Barracuda Networks (NYSE: CUDA) with a price target of $49. Comments follow Q1 results and a billings 'miss' that sent shares lower by 20%. Analyst Rob Owens sees opportunity in the decline.

"We are opportunistic buyers of CUDA," said Owens. "While revenue of $78 million was in line with our estimate, gross billings of $94 million missed our estimate of $103 million by a considerable amount. Results were affected by a greater-than-anticipated FX headwind, weaker-than-expected storage billings and a mix shift to virtual appliances, which produce less upfront billings relative to a physical appliance."

"Storage billings meaningfully missed expectations as storage billings growth slowed from greater than 30% to the low double digits. FQ1 included fewer selling days due to a number of distractions in the quarter (sales kick off, new distribution partners, RSA) as well as fewer large transactions relative to FQ4. Management stated many of the large deals were pushed to FQ2, some of which have since closed. Commentary suggests that an end-of-quarter acceleration and a strong June have contributed to a better outlook for the rest of the year, as evidenced by F2016 guidance being maintained," continued the analyst.

Owens added, "We continue to view Barracuda as a solid name in SMB security and storage with a significant long-term opportunity. While a disappointing billings number in the quarter is certainly a hiccup, we do not view it as changing the fundamentals nor the underlying opportunity. We remain buyers with a $49 price target."

For an analyst ratings summary and ratings history on Barracuda Networks click here. For more ratings news on Barracuda Networks click here.

Shares of Barracuda Networks closed at $39.12 yesterday.

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