Splunk (SPLK) PT Lifted to $55 at Needham & Company

August 30, 2013 8:43 AM EDT
Get Alerts SPLK Hot Sheet
Price: $53.71 -0.13%

Rating Summary:
    34 Buy, 11 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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Needham & Company analyst Scott Zeller raised his price target on Buy-rated Splunk (NASDAQ: SPLK) from $50 to $55 following Q2 results.

Zeller comments, "The Splunk JulyQ results were strong in a season for software which was largely disappointing. We continue to believe SPLK is benefiting from secular growth of the Big Data market, and the need for companies to leverage semi-structured data in the enterprise. As a fast grower (total revs +50% y/y, license revs +43% y/y) one may wonder how Splunk can continue to grow at a fast pace – three drivers come to mind for us: (1) existing customers continue to get "deeper" into Splunk, with 70% of license bookings consistently coming from existing customers; (2) the "non-IT" expansion story is still a future catalyst, with roughly 90% of revenue still centered on IT usage – over time, the "business user" should expand the TAM for Splunk, offering additional growth; and (3) International remains low, at 21% -- the non-US opportunity for Big Data is large, and will likely be a revenue driver for the future. Splunk has set expectations with investors that margin expansion is not a priority while the company grabs market share in data analytics, and guidance was a "raise" on revenue, with operating margin remaining at breakeven. We believe SPLK's core business is capable of growing at 40%+ consistently, and the company has catalysts that we believe may accelerate growth in FY15-16, suggesting our estimates may be conservative."

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 $48.92 yesterday.

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