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UPDATE: BMO Capital Markets Initiates Coverage On Splunk In Midst Of Transition

Dwight Einhorn

In a report published Friday, BMO Capital Markets analyst Joel P. Fishbein Jr. initiated coverage on Splunk (NASDAQ: SPLK) with a Market Perform rating and $51.00 price target.

In the report, BMO Capital Markets noted, “Splunk is in the midst of transitioning from being a pioneer in the nascent Operational Intelligence market into becoming a broader data analytics platform provider. Splunk faces a substantial market opportunity and has differentiated technology; however, the company is relatively small and we believe distribution and scale are significant constraints.

"The company needs to continue to invest in specialty overlay sales capacity to address new pockets of spending within organizations and must align product pricing to customer capacity growth. Near term we are concerned that the shift from transactional to more enterprise agreements could weigh on sales cycles until a repeatable pricing model is developed. Slower-than-expected growth likely keeps shares range bound despite our view that competition concerns are overblown and the market opportunity is significant.”

Splunk closed on Thursday at $45.78.

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