Citing positive checks and "recent due diligence" regarding two privately-owned rivals, JMP has hiked its FQ1 Splunk (SPLK +0.4%) revenue forecast by $1M to $83M (above an $80.7M consensus), and is reiterating an Outperform ahead of the company's May 29 report. Shares are up slightly on a down day for equities.
With shares now at $44, JMP has decided to slash its PT by $44 to $66. Its new target spells a valuation of 8.6x EV/2016E sales. "Our target multiple decreases as multiples of other stocks in Splunk's high-growth peer group have declined significantly.”
Morgan Stanley (Equal-Weight) is a little more cautious: Though upbeat about Splunk's long-term opportunity, the firm thinks "a slowdown in productive sales capacity growth, price cuts and increasing competition represent [near-term] tactical headwinds."
The notes arrive as VMware (VMW -2.8%), hungry to grow its non-virtualization revenue base, takes aim at Splunk by launching the second-gen version of its vCenter Log Insight machine/log data analytics software (previous).
VMware claims the product, aimed at Splunk's core IT operations market, delivers a 6x improvement in query performance, as well as new machine learning tech that "automatically groups related data."
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