Needham & Company Downgrades Splunk (SPLK) to Hold

October 2, 2013 7:09 AM EDT
Get Alerts SPLK Hot Sheet
Price: $53.78 -0.07%

Rating Summary:
    34 Buy, 11 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Needham & Company downgraded Splunk (NASDAQ: SPLK) from Buy to Hold on valuation as shares have surpassed their $55 price target and trading at 20x EV/FY15E revenues.

"The Splunk analyst day focused on the move from being a "single product" company to a "multi product" company," analyst Scott Zeller notes. "Guidance was reaffirmed, as was the message that ratable license will grow from roughly 10-20% range, to 20-30% in the future. Our conversations walking the floor were very, very positive on SPLK among customers. We are lowering to HOLD based on valuation; our model changes take into account the increased ratable revenue mix, which pressures license and billings growth in FY15."

Estimates remain largely unchanged for FY14; FY15 goes from 262m license/108m maint/370 revenue/439m billings down to 229m lic/130m maint/359m total rev/411m billings. Our FY15 license growth goes from 37% down to 21%, billings in FY15 goes from 37% down to 29%.

For an analyst ratings summary and ratings history on Splunk click here. For more ratings news on Splunk click here.

Shares of Splunk closed at $61.50 yesterday.

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