Splunk (SPLK) price forecast: what can you expect now?

Carla Olson | 2:02 pm ET, 25 May 2018

Splunk is down 3% post-earnings release.  What can you expect from the SPLK stock price now?

Splunk reported first-quarter results that were in line with analysts' expectations as the firm continues to execute well on its transition to cloud-based services and subscription-oriented contracts. 

The management team offered a solid outlook for the balance of the year. Splunk is likely to expand its presence within the enterprise sector, but there are other companies in the enterprise space with better growth prospects. Some names that come to mind are Microsoft, Guidewire, Salesforce, Blackbaud, and ServiceNow.

First-quarter revenue rose 37% versus the prior-year period to $312 million. Management continues to see strong adoption of Splunk’s enterprise platform beyond security, as use cases for IT Ops, DevOps, and Cloud Management remain popular applications for Splunk’s solutions. 

Large deals continue to flow as a result of Splunk’s versatile platform, with the firm closing 43 seven-figure deals in the quarter, up from 35 in the year-ago period. 

The firm added 460 customers in the quarter.  Annual contract value (ACV) rose 21% versus the prior-year period to just over $80,000, suggesting customers are not only spending more with Splunk earlier in the cycle but growing their consumption as the relationship matures. 

Management lifted its full-year revenue outlook to $1.64 billion, up from $1.62 billion. The firm is well positioned to exceed its fiscal 2020 revenue goal of $2 billion.

Based on Finstead research, SPLK price target upside is -17.78% (visit Finstead and type "SPLK upside" to get the latest scoop).  

Over the last year, SPLK returned +71.73%. This return is higher than Application Software sector (29.63%), Technology industry (18.70%), S&P 500 (12.95%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Splunk Inc. (SPLK) Buy or Sell Stock Guide

Updated at: 9:12 am ET, 25 Dec 2018

The analysis below may be helpful to you if you have any of the following questions about SPLK stock:

  • Is SPLK a buy or a sell?
  • Should I sell or hold SPLK stock today?
  • Is SPLK a good buy / a good investment?
  • What are SPLK analyst opinions, recommendations, ratings?

Here are SPLK stock buy reasons/signals:

1. Splunk’s schema-on-the-fly allows the firm’s software to compile and analyze data across multiple formats and disparate sources, creating an edge over legacy vendors.

2. Splunk’s price-per-gigabyte approach affords the company significant pricing power as customers increase the amount of data flowing through the software.

3. The versatility and open nature of Splunk’s software allows for heavy customization, which we believe works toward elevating customer switching costs.

4. SPLK quarterly revenue growth was 40.40%, higher than the industry and sector average revenue growth (8.56% and 5.17%, respectively).

5. SPLK profitability is improving. The YoY profit margin change was 17.00pp.

6. SPLK PEG ratio (P/E adjusted for growth) is 2.24, and it’s low compared to its industry peers’ PEG ratios.

7. SPLK average analyst rating is Strong Buy.

8. SPLK average analyst price target ($129.91) is above its current price ($92.72).

Here are SPLK stock sell reasons/signals:

1. A number of large, well-capitalized software vendors are vying to retain large customer bases, spurring investment to mimic Splunk’s technology.

2. Outside of SIEM, Splunk has a relatively modest market share, leaving the company vulnerable should competitors step up their efforts in these use cases.

3. Sales and marketing spending is much higher than we would expect from a software company with Splunk’s revenue, which could create challenges in generating operating leverage.

4. SPLK forward P/E ratio is 64.98, and it’s high compared to its industry peers’ P/E ratios.

5. SPLK short share of float is 5.28%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

What are your thoughts on SPLK?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


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