Splunk Analyst Roundup

Splunk Inc SPLK beat Q3 revenue estimates Thursday and the stock was up 3.97 percent to $67.52 on Friday.

Below are highlights from analysts after the news along with current ratings and price targets.


Morgan Stanley - Overweight, $82 price target

“A deeper dive into results bolsters our confidence in the sustainability of growth moving forward, including: 1) expanding use cases: security rose to 40 percent of the mix in Q3 vs 20 percent a few years ago, helped in part by a large 7 figure security deal for Splunk Cloud; 2) expanding volume: Splunk noted a record number of transactions in 3Q with deals >$100K up 40 percent YoY; 3) expanding delivery models: the ratable mix was 40 percent of license billings in Q3 (34 percent ex the large security deal) vs. 32 percent in FY14 with good adoption of Splunk Cloud / Hunk/ EAAs while Splunk sees a move towards 25 percent of billings from the cloud over the next ~3 years and 4) better sales productivity: our estimate of license billings per productive rep inflected in 3Q, up 13 percent YoY vs. vs. down 6 percent in 1Hand -11percent in FY14.”


FBN - Outperform, $80 price target
 
“We reiterate our Outperform rating on SPLK and raise our PT from $70 to $80.  For the FQ4/Jan. quarter, SPLK is guiding for revenue of $135-137M (+35-37 percent Y/Y and above consensus of $133.3M) and a NG operating margin of 3-5 percent. We use a 5 pecent OIM and come up with NG EPS of $.05 (above consensus of $.04). The company is raising its F2015 revenue guidance from $423- $428M to $438M-$440M (implying growth of 45-46 percent Y/Y). For the first time, SPLK is providing guidance for F2016, which is for revenue of $575M.”


Deutsche Bank - Buy, $75 price target

“We believe that the majority of the $6.4 million sequential increase in LT DR was the 7-figure deal that Splunk disclosed, implying that it may be $5-$8 million in total size. This one deal therefore had a material impact on DR and billings (maybe even license sales).The public sector was very strong and may have provided a one-time lift given the seasonal 3Q bump in government purchasing. We’re bullish on the medium-term plan to drive 25 percent of the business from the cloud, but note that this will likely have a negative impact on gross margins as Splunk pays AWS for their hosting infrastructure. While the cloud mix shift is early stage, Splunk is not altering its long-term target for 20-25 percent operating margins.”