Splunk Inc (NASDAQ:SPLK) is scheduled to release its next earnings report, and some analysts think the setup is solid going into that report. Barclays analysts think the company could beat estimates, however, analysts ate Cantor Fitzgerald cut their price target for the stock.

Splunk

Splunk’s numbers look “achievable”

In a report dated Aug. 26, 2014, analyst Raimo Lenschow and the rest of the Barclays team said they think Splunk could at least achieve both their estimates and consensus estimates. However, they believe that very strong results may be needed in order to come crawling back into the good graces of investors. Shares of Splunk have been struggling since February when they hit their all-time high of more than $106 a share. Since then, the stock has plummeted by more than 56%.

The Barclays team notes that sentiment toward high-growth companies like Splunk has been mixed in the last few months. As a result, they believe that if the company shows signs of continuing deceleration, investors could react strongly to the negative, even if the company’s “long term proposition” doesn’t change.

What to expect in Splunk’s earnings report

Splunk management guided for second quarter revenue to be between $92 million and $94 million. They expect that between 60% and 62% of the company’s total revenue will be license revenue. Although the Barclays team’s estimates and also consensus are toward the high end of management’s guidance, the analysts think the numbers are achievable. They also think that the sell side view could be assuming a worse deceleration than they believe is likely.

Quarter over quarter, Splunk’s implied license and total revenue growth rates are “comfortably” below the historical growth rate. The Barclays team thinks this suggests that there’s room for upside. They say at the average quarter over quarter growth rate, license revenue will be $64 million. When looking more closely at productivity assumptions, which include that hiring decelerates meaningfully—unlikely, in their view—license revenue looks to be less than $64 million but still higher than the Barclays estimate.

Splunk price target cut by others

Barclays analysts reiterated their Equal Weight rating and $51 per share price target on Splunk ahead of tomorrow’s earnings report.

Analysts at Cantor Fitzgerald cut their price target for the company, although they still remain higher than Barclays, with a target of $83 (down from $99) per share. Schaffer’s Investment Research analysts believe downgrades are possible, as analysts are pretty bullish on the company. Fourteen of the 19 who are covering it have a Strong Buy rating, while five have a Hold rating. There are no Sell ratings on Splunk.