NEW YORK (TheStreet) -- Shares of Splunk (SPLK) - Get Report were falling 7.62% to $60.14 in early-morning trading on Friday as Stifel Nicolaus cut its rating on the stock to "hold" from "buy," Barron's reports.
The downgrade comes despite the software solutions provider's better-than-expected results for the 2017 fiscal second quarter late yesterday.
Stifel said Splunk's results were "solid," but the downgrade is based on "full" valuation and what the firm expects to be difficult comparable sales for the second half of the fiscal year.
The firm noted that while the San Francisco-based company's cloud business has grown quickly, that growth has caused "meaningful compression" in Splunk's license revenue and billings growth rate.
Those businesses gained by 31.5% and 39.6% respectively in the second quarter, but have dropped to their lowest growth levels in more than four years, according to Barron's.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "sell" with a ratings score of D.
The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
You can view the full analysis from the report here: SPLK