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Splunk Stock Declined 4.7% on September 17

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Dec. 4 2020, Updated 10:53 a.m. ET

Splunk closed trading at $119.49

Splunk (SPLK), a cloud software solutions company, fell 4.7% on September 17. The stock is currently trading at $119.49, which is 92% above its 52-week low of $62.39 and 8% below its 52-week high of $130.

Splunk stock has risen 44% this year and declined 6.8% in September. In the last week of August, the stock rose ~20% after posting impressive quarterly results. It beat analysts’ earnings estimates by 60% in the fiscal second quarter of 2019.

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Splunk extended its customer base in its fiscal second quarter since the company brought 550 enterprise companies on board, compared to 440 in the first quarter. SPLK also expanded its ongoing partnerships with Southwestern Energy (SWN), the United States Department of Defense, Amazon (AMZN), and Automated Data Processing (ADP).

So for Splunk, it again looks like a case of profit booking by investors. Splunk stock has almost quadrupled from $31.32 in February 2016. Its revenue has grown sixfold between fiscal 2013 and fiscal 2018 with a significant improvement in its profit margins.

Revenue expected to grow 33% in 2019

Analysts expect Splunk’s sales to rise 32.6% YoY (year-over-year) to $1.7 billion in fiscal 2019 and 24% YoY to $2.1 billion in 2020. Its EPS is expected to rise 77% in 2019 and 41% in 2019 to $1.55.

Its EPS is expected to grow at a compound annual growth rate of 36% over the next five years.

Of the 42 analysts tracking Splunk, 31 have recommended a “buy” for the stock, and 11 have recommended a “hold.” There are no “sell” recommendations. The average 12-month target price for Splunk is $131.05, indicating that the stock is trading at a discount of 10% to its current price.

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