Splunk Revenue Guidance Draws Split Analyst Opinions

Analysts are split on Splunk after the data-analysis-software company's revenue forecasts missed Wall Street's estimates.
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Analysts on Thursday were split on Splunk (SPLK) - Get Report, with some cutting their share-price targets and others raising them after the data-analysis-software company's revenue forecasts missed Wall Street's estimates.

Shares of the San Francisco company at last check were down 6.8% to $144.79.

RBC Capital analyst Matthew Hedberg raised the firm's price target on Splunk to $180 from $165, while affirming an outperform rating on the shares.

Splunk posted fourth-quarter sales of $791 million, up 27% from a year earlier and above Bloomberg’s analyst consensus of $782.9 million. Adjusted earnings per share registered 96 cents, matching analysts’ prediction.

Hedberg said the fourth-quarter results were strong with an upside to headline metrics and a bullish annualized recurring revenue growth forecast of 40%, which was "much better than expected." 

He also said the company's management did a good job "bridging the lower fiscal 2021 revenue/margins" due to a higher cloud mix.

For the fiscal 2021 first quarter, the company predicted revenue of $450 million, compared with Bloomberg’s consensus analyst forecast of $523 million. 

For fiscal 2021, Splunk predicted revenue of $2.6 billion, short of analysts’ projection of $2.88 billion.

Michael Turits, an analyst with Raymond James, cut his price target on Splunk to $179 from $199, while keeping an outperform rating. 

Turits said the company had a faster-than-expected shift from term to cloud projected into next year and beyond, and he attributes most of the shortfall to the mix shift.

Cowen analyst J. Derrick Wood called Splunk's fourth-quarter results solid and said the lower guidance indicated more model-transition factors, such as an accelerating cloud bookings mix, which impairs near-term revenue receivables. 

He raised his price target to $165 from $160 and affirmed an outperform rating on the shares.