Bank of America Merrill Lynch Reiterates Buy Rating, $39 PT on Splunk

In a report published Friday, Bank of America Merrill Lynch reiterated its Buy rating and $39.00 price target on Splunk

. BofA Merrill Lynch noted, “Splunk reported another strong qtr with all metrics handily beating our ests. Lic rev grew by +61% y/y at $30mn vs. our est of $26mn (+38% y/y). However lic bookings growth could be even higher, because a higher % of lic bookings (17% vs. 11% in Q1) are term licenses (instead of perpetual licenses) which get recognized as revenue ratably over four qtrs, resulting in lower reported lic rev and increase in deferred licenses. The street has not yet grasped the positive, large and growing delta between lic bookings and reported lic growth. Total rev grew by +71% y/y at $45mn vs. our est/cons of $40mn (+53% y/y). (see variance table on pg 3). The strong performance was attributable to 1) significant increase in large deals (>$100K) of 98 vs. 73 last qtr and 65 a year ago; 2) impressive renewal rate of 91% (which continued to improve over 88% in Q1 and 84% in Q4); 3) healthy up-sell to existing customers which account for 71% of bookings.” Splunk closed on Thursday at $30.50.