Analysts lauded Splunk Inc. post Q1 beat. Credit Suisse analyst Phil Winslow maintained Splunk with an Outperform and lowered the price target from $225 to $180 (82.3 percent upside).
Winslow remains optimistic about the company’s business trajectory and the strategic importance of Splunk, as evidenced by (1) regular total ARR and Cloud ARR growth and net expansion rates and (2) inflecting operating cash flow.
RBC Capital analyst Matthew Hedberg maintained Splunk with an Outperform and lowered the price target from $152 to $143 (44.8 percent upside).
Splunk delivered a solid quarter to start the year highlighted by revenue outperformance showing the fastest growth since Q1/19, driven by license strength and better than expected profitability.
FY/23 guidance increased revenue and operating margins while ARR/CFO was unchanged as management is currently seeing no negative macro impact on demand or large deals.
BMO Capital analyst Keith Bachman maintained Splunk with an Outperform and lowered the price target from $142 to $125 (26.6 percent upside).
Given recent execution inconsistencies, Bachman thinks in-line ARR and cloud revs, with upside in margins and FCF for the April quarter will support the shares.
Further, management modestly raises FY23 rev targets while maintaining other guidance metrics. Bachman thinks Splunk has some valuation support based on FCF, which is a crucial investor focus in CY22.
Needham analyst Mike Cikos maintained Splunk with a Buy and lowered the price target from $145 to $118 (19.5 percent upside).
The decision not to pass through the operating upside makes the new guidance conservative and beatable while providing management the flexibility to invest where the headcount had been relatively flat over the past two quarters.
The management has appropriately discounted New Logo growth to account for a less specific macro.
