Splunk ($SPLK) dropped 20% from $200 to $160 due to a bad quarter earnings report. Revenue shrank 11% from a year earlier, missing estimates for a third straight period. Some interesting information about who is recommending this stock:
- Ark immediately picked up 300,000 shares today.
- Morningstar examined the earning call and said the drop was due to pandemic and therefore maintained their price target of $208.
- Motley Fool's paid Stock Advisor service recommended this stock sometime in 2020.
- Snowflake is trading at over 70 times next year’s revenue, while Zscaler and Zoom are priced at well over 30 times forward sales. Splunk’s price-to-sales multiple for next year is 10.
What does this company do?
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It offers enterprise cloud software solutions for information technology operations, security, internet-of-things, application analytics, business analytics and industries.
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91 of the Fortune 100 companies are Splunk clients. For example, Splunk helps Dominoes manage the 15 digital channels its customers use to order Pizza. Splunk has been providing IT monitoring and application management for Zillow since 2013.
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Only 50% of Splunk's clients are on their cloud subscription service. But Splunk is aggressively trying to transfer all the business to cloud, and Morningstar says once that is done Splunk should be "poised for robust growth."
Caveats - The biggest caveat here is why did other data companies perform so well while Splunk tanked? One analyst told CNBC:
the concern for Splunk is that companies are focusing today on buying technologies that are critical to getting through the current crisis. The third-quarter miss is likely due to “de-prioritization of analytics relative to digital transformation and security investments in response to COVID-19/WFH,” Turits wrote. Longer term, he said Splunk remains “the de facto machine data platform standard,” and he still recommends buying the shares.
What do you think? Is 20% a good discount for this industry leader?
Submitted December 03, 2020 at 09:55PM by r2002 https://ift.tt/2JpQBTj
