At the same time an RBC Capital Markets analyst reiterated his buy-equivalent rating on the San Francisco company.
At last check Splunk shares were climbing 3.6% to $182.19.
Baird analyst Jonathan Ruykhaver also increased his share-price target to $240 from $22.
"We look at Splunk's strong growth in annual recurring revenue as indicative of strong underlying business fundamentals despite the model noise and appreciate the moves the company has made to invest in its cloud offering," the analyst wrote.
Overall, he added, "we like Splunk given this cloud momentum, its continued leadership in security, and investments the company has made in IT operations/observability."
"We see the creation of a compelling cloud offering as increasing the accessibility of Splunk and as positioning Splunk to benefit from a continued shift toward cloud-delivered solutions," Ruykhaver said.
"Management has noted that the company had previously held back sales reps from more aggressively pushing cloud prior to this year, so we see ample runway for continued cloud growth."
Given Splunk's market-share leadership in IT operations management and recent investments the company has made in observability, notably via the SignalFX acquisition, the analyst says 'Splunk is poised to be a beneficiary of what we see as an increased need for a platform approach to observability as workloads continue to shift to the cloud."
RBC Capital Markets Matthew Hedberg, who reiterated his buy-equivalent rating, said Splunk should see “limited disruption” from recent management changes.
Hedberg also said he expects growth in cloud services to continue to widen the company's profit margins in the long term.
Splunk “remains one of our favorite ideas as annual recurring revenue grows at a rapid pace,” he said.