Spunk Receives Upgrade Leading Up To Q1 Earnings Report

In a note released Tuesday, Northland Securities analyst Tim Klasell upgraded Splunk SPLK from Market Perform to Outperform, but has lowered the price target from $95 to $66 due to a recent pull back in peer multiples. Looking to the company's fiscal first quarter earnings release, Klasell wrote, "We expect positive FQ1 results with channel checks showing nice momentum into the end of the quarter." Klasell sees Security as the primary driver of this momentum followed by IT operations, both of which account approximately 30 percent. Klasell noted the only real competition Splunk currently faces is Sumo Logic, which offers a similar product but in a cloud only format. Looking forward, Klasell acknowledged the competitive landscape could change over time, but takes comfort in the company's introduction of Hunk and Splunk Cloud. Speaking on Splunk's competition Klasell commented, "we still characterize the competitive landscape as benign and don't expect much to change in the next 12 months." Shares of Splunk have jumped up as much as seven percent in Tuesday's trading.