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Splunk Gets Analyst Support After Revenue Misses Estimates

Analysts see positive signs in Splunk's mixed second-quarter results. Here's what they're saying.

Analysts were rallying behind Splunk  (SPLK) - Get Splunk Inc. Report Thursday, raising their share price targets, even after the data analytics company missed Wall Street's second-quarter revenue expectations.

Shares of the San Francisco company were down 2.6% to $211.08.

Splunk, which is shifting from licensed software to a cloud-based subscription model, reported a second-quarter loss of $261.3 million, or $1.64 a share, compared with a loss of $100.9 million, or 67 cents a share, a year earlier. The adjusted loss came to 33 cents a share, matching FactSet's forecast.

Revenue totaled $491.7 million, down from $516.6 million a year ago, and missed Factset's call for $520.4 million. Splunk expects third-quarter revenue to range from $600 million to $630 million, short of Wall Street's forecast $641.5 million.

Despite the revenue miss, analysts saw positive signs in the results.

Citigroup analyst Walter Pritchard upgraded Splunk to neutral from sell and raised his price target to $234 from $105.

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Pritchard acknowledged the company's weak revenue results, but noted that management reiterated its three-year annual recurring revenue growth target.

BMO Capital Markets analyst Keith Bachman, who raised his price target to $235 from $190, said he believes investors should focus on customer related performance outcome "as the most relevant demand metric and we think 37% y/y growth in the midst of a weak global economy is impressive, particularly with improved growth vs the 30% y/y growth in the April quarter."

Rob Owens, an analyst with Piper Sandler, raised his price target to $230 from $185, while keeping an overweight rating on the shares.

"We have confidence in Splunk's strategic value and with cloud mix accelerating, we see a clear path to a more predictable model," he said in a note.

Credit Suisse analyst Brad Zelnick raised his price target on Splunk shares to $235 from $190 and reiterated his outperform rating, saying the company "reported a mixed F2Q led by cloud strength in the midst of a very tough environment."