CUDA Stock Positive Earnings Yield Strange Results

CUDA Stock
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Barracuda Networks Stock 

The cybersecurity business has never been in more demand than it is today. In recent months, two monumental malware attacks were undertaken and successfully infected thousands of computers across the world, causing both panic and financial damage. While this is bad news in general, firms like Barracuda Networks Inc (NYSE:CUDA), that work in the cybersecurity industry, should be licking their chops. In fact, the CUDA stock price should be shooting up on the backs of these types of online threats. But if you look at the recent Barracuda Networks news, the stock hasn’t been performing as well as some of its rivals.

One of the big upcoming events that was meant to spur more interest in CUDA stock came and went as the first-quarter Barracuda earnings report was released last Monday.

While this bit of Barracuda Networks news was meant to be a boon for the company, it didn’t exactly work out as planned.

For instance, while CUDA stock has risen by about 10% since the beginning of the year, other cybersecurity companies like FireEye Inc (NASDAQ:FEYE) have seen significant gains, with FEYE jumping by 30% since the start of 2017.

CUDA stock chart

Chart courtesy of StockCharts.com

CUDA Stock Earnings

The interesting thing about this bit of Barracuda Networks news is that the CUDA stock price dropped despite the earnings report being pretty positive and even beating Wall Street expectations.

The company saw a Q1 total revenue growth of nine percent compared to last year, amassing $94.2 million.

The GAAP earnings per share hit $0.05, and non-GAAP earnings per share registered at $0.18. Both were in line with projections. The company was also able to collect 335,000 active subscribers to its services.

Also ReadWhy the Ransomware Hack Is Amazing for Cybersecurity Stocks

Despite all the seemingly good news for the company, it ended up dropping by about five percent later in the week after a small uptick in the CUDA stock price in the immediate aftermath of the earnings report.

Despite the strange reaction to the otherwise positive (if not spectacular) Barracuda earnings report, the company has since recovered and has seen little overall effect—at least so far—in the CUDA stock price.

A potential reason for the stock’s less-than-stellar gains following the Barracuda earnings report could have to do with the success of its rivals. The media hype surrounding cybersecurity could be a possible explanation for the lackluster performance of CUDA stock, as interest in cybersecurity only grows with each passing month.

CUDA Stock Price

At this point, many analysts are still high on the CUDA stock price, giving it a “buy” rating and believing that there is room for growth at the company.

In my mind, however, its weak performance when compared to direct rivals means that investments in FEYE stock and other similarly well-performing cybersecurity firms might be the better play.

While the industry is certainly only going to increase in importance considering the amount of attention paid to malware, election hacking, leaks, etc., that doesn’t mean all cybersecurity firms will be affected equally.

One of the bigger upcoming moves for CUDA is its increasing emphasis on cloud-related products. As the cloud becomes a more ubiquitous platform, there is a chance that this focus will pay off, with high yields down the road. Of course, it is not the only company vying for this chunk of the market, but still, a strong move by CUDA could be great Barracuda Networks news and help get the stock on pace to catch or even overtake its better-performing rivals.

To put a finer point on it: Investors might want to keep an eye on the CUDA stock price and be ready to pounce if things start looking up, but for now, stick to better performers like FireEye.