Barracuda Turns Up After Earnings Beat Expectations: What Wall Street's Saying

NEW YORK (TheStreet) - Barracuda Networks turned up yesterday following its third-quarter earnings report, which exceeded expectations. The Campbell, Calif.-based company narrowed its loss to $36,000, and adjusted earnings per share were at 6 cents, beating analysts expectations of 5 cents a share, according to Thomson Reuters. Must Read: Fab Co-founder Takes Another Stab At E-Commerce To Defend the Little Guys Against Amazon Barracuda, which provides cloud-based security and storage services, also exceeded analysts expectations for revenue, reporting revenue of $70.4 million compared to expectations of $70.1 million. Shares rose 3.2% yesterday to finish at $40.15. Here's what analysts said about Barracuda following the quarter: Rob Owens, Pacific Crest (Outperform, $45 PT) Despite being relatively in line, FQ3 showed signs of acceleration. Billings, continued inflection in net new subscribers and subscription revenue were all on an upward trajectory. We continue to be confident in the long-term opportunity and remain favorable on shares. We believe Barracuda's unique business model helps insulate it from large competitive pressures and allows it to disrupt a highly fragmented midmarket. As concerns over security and compliance are increasing, we believe that CUDA should be a clear beneficiary. Must Read: Analysts' Actions: AbbVie, American Eagle, Crocs, Lilly, Yelp David Faugno, Topeka Capital Markets (Buy, $46 PT) We reiterate our Buy rating while raising our price target to $46 from $38 as we introduce FY17 estimates ($385mm/$0.59). The story remains one of accelerating billings growth that will help push YoY revenue growth toward 20% which, in turn, will be an important element in the Company's stated goal of reaching 20% operating margins (currently 6.6%) over the next 3-4 years. If successful, CUDA will enjoy EPS growth 2-3x the rate of revenue growth. Erik Suppiger, JMP Securities (Market Outperform, $43 PT) Billings of $91.5M grew 18% Y/Y; however, adjusting for currency fluctuations, billings grew 20% Y/Y, above the prior consensus of 18%. Billings growth was driven by strong momentum in Storage and Network Security sales, and an increase in the number of larger deals. In our view, this trend suggests that Barracuda is becoming recognized as a best-of-breed Network Security and Storage player for SMBs, and we believe the company is positioning to become a broader provider to the mid-size enterprise market. In addition, subscription revenue grew 21% Y/Y as customers are increasingly deploying virtual appliances for public and private cloud environments. Must Read: Jim Cramer's Top Stock Picks: AAL SAVE EW MNK KR Written by Rebecca Borison in New York >Contact by Email. Follow @borisonr // 0;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); // ]]>

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