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Broker Wedbush downbeat on Splunk Inc and its move to cloud

In May, the group posted stronger than expected first quarter numbers
Splunk was downgraded by broker Wedbush

Splunk Inc (NASDAQ: SPLK), the big data analysis group, was downgraded by broker Wedbush today to 'neutral' from 'outperform'.

It has looked at what it sees as the first quarter weakness shown by the firm and issues surrounding its transition to the cloud model.

In May, the group posted stronger than expected first quarter numbers and a 10th consecutive quarterly earnings beat, with revenue growth, including a 15.6% increase in license revenue to $116.7 million, and 48% growth in maintenance and services revenue to $125.7 million

Wedbush said: "We think the cloud transition is creating complexity from a mixed go-to-market model, meaningful competition is starting to emerge on several fronts, and fundamentals are likely to remain somewhat messy even if the company succeeds in fixing European execution issues.

"Management likely has enough visibility that it can continue its beat-and-raise approach, but the magnitude of SPLK's outperformance will likely be less than in the past."

The broker has reduced its share target to $63 from $72 previously.

Shares in New York today added 0.24% to $57.74.

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