- William Blair analyst Jonathan Ho reinitiated coverage on Splunk Inc SPLK with an Outperform rating.
- The analyst sees significant growth opportunities for the company in the observability, cybersecurity and core machine search markets.
- The analyst believes Splunk had made considerable operating leverage improvements on cost-saving initiatives and strong cash flow from the earlier shift to annual invoicing.
- Ho believes that Splunk is a dominant player in the traditional machine search and SIEM market, with a strong positioning in the observability market. Given the increasing complexity of IT infrastructure, the analyst believes Splunk can service the need of larger enterprises.
- As per the analyst, Splunk's pricing model is not constrained by data ingestion and instead focuses on resource utilization. He believes this approach aids the company in offering its customers a strong value proposition.
- Ho thinks Splunk's go-to-market model and operating cost savings could help increase sales productivity going forward.
- The analyst sees risks such as pricing pressure, large cloud migration delays, slowing dollar-based net retention and ARR growth as matters of concern.
- Ho expects revenues of $3.88 billion in 2024 and $4.34 billion in 2025.
- Price Action: SPLK shares are trading higher by 0.24% at $92.79 on the last check Wednesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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