Splunk buyout seems more likely than not, analyst says
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A Splunk (NASDAQ:SPLK) buyout seems more likely than not, especially after a report that activist investor Starboard Value has taken a stake, according to a Needham analyst. 
Splunk shares rose 5.6% on Monday on a WSJ report that activist Starboard has taken just under a 5% stake in the software maker and plans to push for changes. Starboard founder and CEO Jeff Smith is set to appear at the 13D Monitor Active-Passive Investor Summit on Tuesday and will unveil his ideas about Splunk (SPLK) there.
"Investors we have spoken with this year have increasingly viewed a buyout of Splunk as a binary event," Needham analyst Mike Cikos wrote in a note on Monday. "We believe the volume of potential buyout candidates and activist investor agitation indicates a deal is likely. Separately, we view Mr. Smith's expected conference presentation and discussion on Splunk as rallying support for a takeout."
The Starboard stake comes after private equity firm Hellman & Friedman last month agreed to a standstill agreement with the cloud-services company. H&F has a 7.87% stake in Splunk and began buying the shares after the company's shares plummeted when the company's former CEO resigned in November, according to an earlier WSJ report.
Recall in February, the WSJ reported that Cisco (CSCO) made a more than $20B acquisition offer for Splunk.
Cikos, who has a buy rating and $118 price target on Splunk (SPLK), said that even without the takeover speculation, Splunk is one of Needham's favorite names. He highlighted that new CEO Gary Steele didn't "miss a quarter" when he was head of Proofpoint. He also said Splunk hasn't walked away from its $1 billion free cash flow target, the timing was just "pushed further out."
In a report last week, RBC listed Splunk (SPLK) as one of the most likely M&A targets for a strategic acquirer.