American software company Splunk stock is performing well lately and attracting attention from analysts and investors. The company is set to release its earnings for Q3 2022 soon. Many analysts were seen to drop the price target for Splunk (SPLK) stock following the earnings release for Q2 2022 in August.
Splunk earnings release consisted of a drop in several prominent factors from their expected figures. Analysts expected earnings per share (EPS) for stock to stay around 1.58 USD while it stayed only at 0.94 USD. Revenue for Q2 2022 also did not result as expected, on the positive side though—the estimates were for 747.92 million USD while actual earnings were 798.75 million USD. This was a big deal considering growth of 31.9% in revenue from Q2 2021.
However, other indicators of Splunk stock witnessed negative growth. Return on equity remained negative 396.11% while the net margin remained negative 32.85%.
Splunk Stock Rating and Target Price Dropped
Many analysts went on to drop the stock rating and targeted price for Splunk stock looking citing the performance in the second quarter. Truist Financial set a target price for SPLK stock 145 USD but later dropped it to 130 USD. Argus also reduced the targeted price and rated the stock to buy. Cowen, Mizhuo and Citigroup also went on to do the same and reduced the price to 95 USD, 110 USD and 118 USD respectively.
The sentiments around the Splunk seems to change and could be inferred from the recent increase in target price and rating for the stock. CFRA analyst John Freeman gave a buy rating to SPLK stock and set the target price 129.80 USD.
Target price for SPLK stock from Freeman is impressive and it’s up by over 55% given the current trading price of 83.16 USD.
Advantages Making Splunk Unique
Splunk stock is worth considering given various factors that give the company a competitive advantage within the industry. The company has data processing capabilities that are quite hard to replicate. Market share of the software company also plays a significant role in its image over different sectors especially in IT space. Transition of Splunk to provide subscription based cloud services also came up as a notable move and brought advantages for the company as well its stock price.
Given the potential and optimism within the company, many prominent hedge funds also hold SPLK stock in their portfolio. Worth Asset Management LLC and First Horizon Advisors, for instance, hold stocks worth 27,000 USD. While Private Trust Co. NA and NuWave Investment Management LLC have 29,000 USD worth of stocks. Notably these hedge funds increased their holdings following the Q2 earning release.
