Opinions
Mike S. Newton, CIM FCSI
Splunk Inc
SPLK-Q
PAST TOP PICK
Apr 15, 2015
$63.450
Stock price when the opinion was issued
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PARTIAL BUY
Allan Tong’s Discover Picks Despite its unfortunate name, Splunk is an American data analytics company worth considering. Clients that use their platform include Intel, Comcast and Coca-Cola. It IPO'd in 2012 as an early big-data tech stock and has risen in this space since. Their data has moved to the cloud, and their cybersecurity segment has grown. Read Uber Stock and Splunk Stock: 3 More Exciting Top Tech Stocks to Watch for our full analysis.
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WAIT
It sold off in today's Pfizer vaccine really. Be patient, don't wait. He strongly believes in it. This could reach $180.
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TOP PICK
Stockchase Research Editor: Michael O'Reilly SPLK has worked hard to transition their business from an on-premises software service to a cloud-based business and the results are beginning to show. Recently reported earnings beat analyst estimates with annualized recurring revenues surging by over 40% to $2.3 billion. Over 90% of the stock is held by institutions, who have a strong staying power. The company is still not yet profitable, but with the pipeline of projects and cash flow growing (an estimated $900 million last year), they are well positioned. We would purchase this with a stop-loss of $100, looking to achieve $209 -- upside potential exceeding 54%. Yield 0% (Analysts’ price target is $208.91)
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PAST TOP PICK
(A Top Pick Sep 21/20, Down 12%) He bought a 1/3 position here at $155, and he'll add at 140 and 125. Growing like a weed despite its scale. Uses are infinite, very focused on visualizing and analyzing machine data. Management always has profitability in mind. Valuation continues to be reasonable. Growth trajectory, but almost considered cheap.
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BUY
Last week, they delivered a nice top and bottom-line beat and raised its full-year forecast. But they didn't raise their annual recurring revenue guidance, and cut it by $250 million and cloud revenue came in light for the quarter. So, shares tumbled 12% the next day. Remember that Splunk is transitioning to a software-as-a-service business model, so maybe there's a speed bump (given the recurring revenue guidance). But demand for security isn't going away.
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DON'T BUY
BUY
Enterprise cloud computing has had a rough year, but SPLK just reported a strong quarter and rallied. They reported 83 cents EPS vs. the expected 25 and much higher than expected sales, up 44% year over year. They raised their full-year forecast. In October, shares trades in the low-$60s, but their business is holding up just fine.
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(A Top Pick March 31/14. Down 11.25%.) He bought this as it was coming off a 35% correction at around $65 and he immediately got stopped out. Still a big name in big data analytics. A great story that will do well.