Barracuda Networks initiated with enthusiasm on Street

Barracuda Networks (CUDA +2.7%) shares trade up after receiving 5 Outperform ratings and 1 Buy on Street initiation day and PTs of $25-$28.

William Blair analyst Jason Ader calls the recent IPO a "Business Model Story," with the company's uniqueness stemming from its business model rather than specific products. He observes, Barracuda "targets small and midsize business (SMB) customers and offers easy-to-use IT products in high margin segments, with a powerful branding capability, a high-velocity sales engine, and proactive customer support."

Margins may be set to improve as the company diversifies from the maturing content security segment (~3% growth) to the storage segment (~40% growth), Ader adds.

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