Cuda Web App Firewall

This web app firewall couldn't protect Barracuda's share prices on Wednesday. Photo: Barracuda Networks.

What: Shares of Barracuda Networks (NYSE:CUDA) fell more than 33% on Wednesday, following the release of disappointing results for the second quarter of fiscal year 2016.

So what: The maker of storage and security products for cloud-related computing platforms delivered mixed results in the second quarter. Adjusted earnings rose 25% year over year to land at $0.10 per share, beating analyst estimates by a penny. Revenues rose 14% to $78.5 million, a rounding error below Wall Street's consensus targets. Not too shabby, and certainly no reason for a 33% haircut.

Indeed, Barracuda shares rose modestly on the earning release itself. But the bottom fell out during management's earnings call with analysts, where they slashed the revenue outlook for the second half of fiscal 2016.

The original forecast had called for approximately 17% sales growth and 39% higher earnings per share for the entirety of 2016. The midpoints of the new guidance ranges fell to roughly 12% higher sales and 25% earnings growth, well below the current analyst views in both cases.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Now what: The soft forecasts were based on macroeconomic and industry trends, both beyond Barracuda's direct control. Currency headwinds refuse to abate, and the turbulent state of the global enterprise storage markets isn't helping Barracuda either.

On the heels of this plunge, Barracuda shares are trading at the lowest levels seen in the company's young life as a publicly traded stock -- by a wide margin. Still, the revenue guidance cuts left some of Barracuda's staunchest supporters adjusting their views.

Analyst house Piper Jaffray, for example, slashed its price targets from $40 to $20 and lowered its rating to "neutral." The firm is losing patience with missed revenue targets and lowered growth guidance, noting that Barracuda's security division isn't outperforming the supposedly market-challenged storage segment.

All told, Barracuda remains a rapidly growing business with a greedy eye on the crucial Internet of Things market, and the stock might not deserve the kind of market backlash it has suffered recently. Opportunistic investors might want to reconsider Barracuda at these low prices, even if management has a troubling tendency to overpromise and underdeliver.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.