Jefferies Believes SPLK Won’t Stop Here

By Carrie Williams

Jefferies analyst John Difucci reiterated a Buy rating on Splunk Inc. (NASDAQ: SPLK) yesterday and set a price target of $81. The company’s shares opened today at $62.48, close to its 52-week high of $65.75.

Difucci commented:

“SPLK reported strong headline numbers and raised guidance, but billings growth slightly decelerated and license rev growth was again below 40%. While mgmt noted exceptionally strong Cloud bookings, this is buried in the Services line. Anecdotal evidence points to significant tailwinds, though it’s difficult to measure business momentum with confidence given a lack of metrics to calculate it. We anticipate further disclosure at FAD in Jan. Details. Non-GAAP EPS of $0.12 on total rev of $244.8M and license of $139.7M easily exceeded consensus of $0.08, $230.3M, and $128.1M, respectively. Non-GAAP op margin of 6.8% was about 150 bps better than consensus. OCF grew 25% yoy to $45.3M, but shy of $49.2 million consensus. Deferred was slightly below consensus at $499M vs. $504M. Rev guidance for F4Q of $286-288M was slightly above consensus $285M, and guidance for F17 was raised to $930-932M from $910-914M. Margin guidance was raised slightly to 5-6% from prior approx. 5%. OCF guidance was for approx.”

According to TipRanks.com, Difucci is a 5-star analyst with an average return of 7.6% and a 53.5% success rate. Difucci covers the Technology sector, focusing on stocks such as SS&C Technologies Holdings, CommVault Systems, and AVG Technologies.

Currently, the analyst consensus on Splunk Inc. is Moderate Buy and the average price target is $70.09, representing a 12.2% upside.

In a report issued on November 22, BMO Capital also reiterated a Buy rating on the stock with a $66 price target.

Based on Splunk Inc.’s latest earnings report for the quarter ending July 31, the company posted quarterly revenue of $213 million and GAAP net loss of $86.6 million. In comparison, last year the company earned revenue of $174 million and had a GAAP net loss of $72.97 million.

Based on the recent corporate insider activity of 77 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of SPLK in relation to earlier this year. Most recently, in April 2016, Guido Schroeder, the SVP, Products of SPLK bought 7,833 shares for a total of $70,497.

Splunk, Inc. engages in the development and provision of software solutions. It offers cloud services, enterprise security, application delivery, big data, business analytics, information technology operations, and log management through its machine data product. It analyzes machine data to deliver operational intelligence for security, IT and the business. The company was founded by Erik M. Swan, Michael J. Baum and Robin K. Das in October 2003 and is headquartered in San Francisco, CA.