Splunk Is An Attractive Asset, Analyst Says After PE Investment In Company

Needham analyst Mike Cikos reiterated a Buy on Splunk Inc SPLK and a $118 price target.
Last week, Splunk announced it had entered an agreement with Hellman & Friedman to provide confidential information, so H&F could assess its investment and provide Splunk with perspective on the company's "business, strategy, and finances."
The announcement comes approximately six months after H&F first disclosed its 7.5% position in Splunk.
A 13D filing on September 9 noted that H&F's position has increased to 7.9%, and the Private Equity firm is Splunk's largest active holder.
Independent of and before the H&F news, he spoke with Splunk last week to calibrate his sense of investor conversations and revisit the 2HFY23 guide.
Walking away from the call, Cikos was incrementally more positive on shares of Splunk. He views Splunk as an attractive asset.
Still, the analyst acknowledged that the demand environment is more tenuous today compared to a few months ago, given commentary on customers' pushouts of Cloud migrations and expansions in the current environment.
However, Cikos believes management has appropriately handicapped these risks with conservatism in the guide.
Also, the focus on profitability and Free Cash Flow demonstrates a more balanced approach by management.
Price Action: SPLK shares traded higher by 4.96% at $99.13 on the last check Monday.