Splunk (SPLK) PT Raised to $70 at UBS as License Growth Re-Accelerates
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UBS analyst Brent Thill reiterated a Buy rating and boosted his price target on Splunk (NASDAQ: SPLK) to $70.00 (from $68.00) as license growth re-acceleration impressed.
Thill commented, "SPLK's $12M upside to St's $128M license was the largest beat magnitude since F4Q16, the second largest since IPO, and a welcome upside surprise post a mixed F2Q. License growth accelerating 200bps to +34% y/y against the year's toughest comp (+45%) was even more impressive considering average order sizes of 7-figure deals was down ~$500K y/y. Net-net, F3Q leads us to believe that while bringing variability into the model, Cloud uptake does not appear to be cannibalizing the perpetual business as dramatically as perhaps feared, even as it continues its healthy trajectory - Cloud orders tripled y/y vs. +200% y/y in F2Q – with perpetual, term, Cloud software flavors likely to co-exist for the foreseeable future. Though we are cognizant of the volatility of license growth and estimate risk from what could be a more pronounced transition year for SPLK (ratable ~50% of revs vs. 10% at IPO), we think SPLK is well-managing a hybrid business / financial model that has hamstrung many transitioning enterprise software peers. Given the strong execution against this backdrop, SPLK's budgetary access across multiple IT subsectors, receding competitive threats, hybrid tech proposition, and relative scarcity value, a premium valuation feels defensible for SPLK's unique franchise."
Shares of Splunk closed at $57.38 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesUBS, IPO
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