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Fly News Breaks for September 13, 2019
SPLK
Sep 13, 2019 | 05:35 EDT
Barclays analyst Raimo Lenschow lowered his price target for Splunk to $142 from $158 while keeping an Overweight rating on the shares. Not knowing the true underlying growth of the business and the surprising lowered cash flow guidance, which removed the potential cash flow valuation support, are the issues facing the stock, Lenschow tells investors in a research note. Splunk has not been a strong performer in recent weeks, but it "deserves a second look," says the analyst. The first issue can be resolved with proper annual recurring revenue and annual contract value disclosure, which management is working on, he writes. And the second issue is mechanical that occurred as part of the subscription transition and can be addressed through proper modeling, argues Lenschow. He believes Splunk will re-emerge in fiscal 2020 and beyond with a better than expected cash profile.
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