Are Analysts Overly Bullish on Splunk After Earnings?

Technology

Published: November 22, 2019 11:40 am

Last Updated: January 30, 2020 12:51 pm

After Splunk Inc. (NASDAQ: SPLK) reported its fiscal third-quarter financial results late on Thursday, investors cheered shares nearly to all-time highs, and analysts seemed to agree, pushing their price targets even higher.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about Splunk after the fact.

The firm said that it had $0.58 in earnings per share (EPS) and $626.3 million in revenue, compared with consensus estimates that called for $0.54 in EPS and $603.7 million in revenue. The same period of last year had $0.38 in EPS and $480.98 million in revenue.

During the latest quarter, total revenues increased 30% year over year. In the same time, software revenues increased 40% to $454 million. Splunk’s term license and cloud offerings drove 53% growth in total annual recurring revenue for the quarter.

Looking ahead to the fiscal fourth quarter, the company expects to see total revenues of roughly $780 million and operating margin of about 23%. Consensus estimates call for $1.03 in EPS and $768.7 million in revenue for the coming quarter.

Doug Merritt, president and CEO, commented:

Splunk continues to show the world how our Data-to-Everything Platform is uniquely positioned to bring data to every question, decision and action. Whether through our groundbreaking innovations like Splunk Data Fabric Search and Splunk Data Stream Processor or aggressive acquisition strategy, Splunk is transforming the way our customers around the world turn data into doing.

Here’s what analysts said after the report:

Maxim Group reiterated a Buy rating and raised its price target to $155 from $148.
Wedbush reiterated an Outperform rating and raised its price target to $162 from $153.
Wells Fargo reiterated it as Outperform and raised its price target to $175 from $165.
Mizuho reiterated a Buy rating and raised its price target to $160 from $155.

Shares of Splunk traded up over 8% at $137.57, in a 52-week range of $90.08 to $143.70. The consensus price target is $150.26.