Summit Research Rates Splunk Shares A Buy, Issues $55 Price Target

After posting a strong beat on earnings Thursday after the close, shares of Splunk SPLK are trading up Friday morning. Summit Research has reiterated its Buy rating and maintained its $55 price target.
Analyst Srini Nandury noted that "Splunk now has beaten the mid-point of guidance by an average of 9.2 percent during each of the last nine quarters by an average of $6 million or 9.2 percent". Thanks to new applications and new use cases along with investment in R&D, Splunk's momentum is expected to maintain upward velocity. After a conversation with management, Summit says it is "increasingly confident Splunk is rapidly becoming a platform for unstructured data, akin to Oracle/MS-SQL server platforms". Aside from Splunk's sticky ecosystem, its "plethora of applications being built but its customers" will make it difficult for other companies to displace the tech company's ecosystem.

Key takeaways from the quarter according to Summit:

• More than 70% of license bookings came from existing customers
• 500 new customers added this quarter, bringing total customers to about 7900
• 226 orders greater than $100K, with record number of transactions
• Quota carrying sales force increased to 226, up from 220 in 4Q
• Expected to finish the year with 300-310 quota carrying sales force
• Only 60% of quota carriers were tenured 12 months or more