A Slam Dunk for Splunk? Some Analysts Think So

Shares of big-data software sorter and analyzer Splunk gain after receiving an upgrade from analysts at Morgan Stanley just ahead of the company's fiscal third-quarter earnings to be released this week.
By M. Corey Goldman ,

I guess you could call it a damn Splunk? 

Shares of big-data software sorter and analyzer Splunk (SPLK) - Get Report were rising on Monday after receiving an upgrade from analysts at Morgan Stanley, who see the company's "robust" free-cash-flow potential as having a positive influence on future revenue and earnings. 

In a research note to clients just ahead of the company's earnings release this week, Morgan Stanley analyst Keith Weiss upgraded his rating on the stock to overweight from equal weight and also lifted his one-year price target to $169 from $140 on what he sees as "increasing clarity" in the company's shift toward a recurring revenue model. 

The shift "likely reveals a durable 25%+ [annual recurring revenue] growth story, with FY23 FCF approaching $1B - which looks undervalued at current levels," the analyst wrote, noting that Splunk currently trades "at a ~30% valuation discount relative to peers."

Splunk last month rolled out a number of updates to its Data-to-Everything platform in an effort to compete more with the likes of Microsoft (MSFT) - Get Report , Salesforce (CRM) - Get Report , SAP (SAP) - Get Report , Oracle (ORCL) - Get Report  and Workday (WDAY) - Get Report in providing more robust software-as-a-service platforms for businesses. It's also looking to fo tete-a-tete with the likes of Cisco Systems  (CSCO) - Get Report .

Shares of Splunk were up up 2.41%, or $2.87 a share, at $122.07. Splunk's stock has been on a rough trajectory this year, trading about 7.5% lower since late August. 

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