Splunk: Cloud Adoption Has Company Positioned To Outperform

Ahead of third-quarter earnings, software solution provider Splunk Inc SPLK is positioned for outperformance, according to Barclays.

“Splunk is positioned to show upside to Q3 consensus estimates when it reports on November 29th,” said Barclays software analyst Raimo Lenschow.

Splunk’s share prices have been depressed following its Q2 report where it beat analyst estimates but dropped 10 percent and have been weighed down ever since.

While consensus estimates are expecting third quarter revenues of $230 million and EPS at $0.08, the revenue estimate indicates 32 percent growth in the quarter, which Barclays feels is a conservative estimate. Splunk has never had a single quarter of growth below 43 percent.

Cloud Progress Remains In Focus

Cloud adoption continues to show substantial promise, with cloud orders up over 200 percent year-over-year, doubling management’s expectations.

“Even though Splunk enjoys a compelling story, we view the stock as fairly valued and reiterate our Equal Weight rating,” added Lemshow.

Barclays has a $56 price target on Splunk.

At last check, Splunk was down 3.66 percent at $57.58.