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

D.A. Davidson downgraded Barracuda Networks Inc (NYSE: 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. (NASDAQ: AMZN), Alphabet Inc's (NASDAQ: GOOGL) Google, and Microsoft Corporation (NASDAQ: 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.