Splunk Now 'Vital' To Security Intelligence Space, Pacific Crest Says

• Pacific Crest analysts Brent Bracelin and Alyssa Johnson recently attended Splunk Inc SPLK’s .conf user event
• The experts share their takeaways in their latest report on the company. They maintain an Overweight rating and $82 price target on the stock.
• Shares of Splunk are up more than 2 percent on Wednesday trading.

After attending Splunk’s .conf 2015 user event, Bracelin and Johnson are feeling increasingly confident on the company’s ability to hold up a profitable, high-growth path into 2016 and 2017, the research note assures. The software products have an increasing number of use cases, especially in the security, operations intelligence, applications management and the Internet of Things fields, they add.

Related Link: Splunk Guidance Could Be Conservative, Morgan Stanley Predicts

The experts also note that the 25 percent selloff the stock experienced since its July highs seems overdone, particularly given the company’s “profitable business model with 20%-plus operating cash flow margin (…) driven by a high volume of sub-$50,000 transactions with more than 70% of revenue from existing customers.”

The report highlights five key points that investors should take into account when placing a bet on Splunk:

1)   Fundamentals seem very strong, security continued to be a hot issue and new products should increase use-cases.

2)   The company is collaborating with Cisco Systems, Inc. CSCO across 20 teams. In addition, they have thousands of joint customers.

3)   Two new features - Universal Search and HTTP collector- could expand Splunk's use cases even further

4)   “Splunk has become a vital part of security intelligence.”

1)   After trying open-source software solutions, Sony Corp (ADR) SNE “decided to standardize on Splunk and signed an unlimited EAA.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.