Splunk may be worth $120/share in a potential takeover - analyst
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Splunk Inc. (NASDAQ:SPLK) may be worth about $120/share in a possible takeout, according to Needham, who cited client expectations for its view. Splunk rose 4.8% in trading on Tuesday.
Spunk (SPLK) rose 5% last Monday and climbed 13% last week after activist Starboard Value reportedly took a just under 5% stake in the software maker and planned to push for changes. Some analysts/investors have also speculated that Splunk could be a takeover after a February WSJ report that Cisco (CSCO) made a more than $20B acquisition offer for Splunk.
Client expectations for a Splunk (SPLK) takeout are around $110-$130/share, according to Needham analyst Mike Cikos, who last week wrote that a Splunk buyout seems more likely than not.
"Notably, we argue that at its current share price, Splunk's valuation does not include a takeout premium," Cikos, who has a buy rating and $118 price target on SPLK, wrote in a new note on Monday. 
Clients argued, as does activist Starboard, that Splunk's (SPLK) margins should be higher, according to Cikos. Investors are also hoping that Splunk's departing CFO Jason Childs will be replaced by Paul Auvil, who was CFO of Proofpoint when Splunk CEO Gary Steele used to be CEO of the cybersecurity firm.
"If Mr. Auvil were appointed CFO, we think it would further bolster Splunkâs blooming Margin-trajectory story," Cikos wrote.
In a report earlier this month RBC listed Splunk (SPLK) as one of the most likely M&A targets for a strategic acquirer.