Barracuda Networks Inc CUDA 0.14% shares were seen up more than 9 percent in Tuesday’s pre-market session after the company reported a big Q3 earnings beat. Barracuda reported adjusted EPS of $0.22 on $88.8 million in revenue compared to consensus Street estimates of $0.14 and $86.6 million, respectively.

Barracuda’s numbers were good enough to warrant an upgrade from D.A. Davidson analyst Mark Kelleher from Underperform to Neutral, but the analyst remains cautious on the stock.

Upgrading, But Cautious

According to Kelleher, Barracuda’s growth story is running out of steam.

“The company’s organic growth rate is clearly slowing,” Kelleher explains. “For Q3 the company delivered 11 percent year-over-year revenue growth, down from 13.7 percent in the year-ago quarter.”

He also pointed out that the mid-point of the company’s February quarter guidance suggests revenue growth could slow to just 5 percent.

Barracuda’s Q3 beat was driven by lower R&D expenses, lower general and administrative costs and a lower-than-expected tax burden. Kelleher believes…

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