Here’s Why The Recent Drop in Qlik’s Share Price is Unwarranted

Shares of data visualization software vendor Qlik (NYSE:QLIK) have slumped by 15% since December 31st and touched a new 52-week low of $26.78 on January 15th. The slump in Qlik’s share prices is due to a confluence of multiple factors in the last two weeks, including new reports by market analysts, insider share sales and concerns of slowing growth in the cloud computing sector.

Prominent research houses like Nomura and Deutsche Bank reduced the price targets for the stock in their latest reports, while still maintaining a “buy” or “outperform” rating. ^[1] Qlik still has an average rating of “buy”, with only 2 of 26 analysts having a “hold” rating on the stock. This suggests that Qlik is still expected to perform well but it may grow at a slower pace than previously expected.

Meanwhile, a recent report by Barron’s fueled growing concerns that the hitherto rampant growth in the cloud computing market may have peaked and could be headed for a slowdown in 2016. ^[2] Qlik actively competes in the cloud business intelligence market through its Qlik Sense Cloud platform, which it unveiled in mid-2015. While Qlik Sense Cloud may currently account for a nominal portion of Qlik’s revenues, it is expected to be a key growth driver for the company as more and more enterprises adopt cloud computing. Thus, concerns of slowing growth in the cloud computing market could be, somewhat incorrectly, assumed to have a detrimental impact on Qlik.

We believe that Qlik’s substantial presence in international markets provides it an advantage over competitors such as Tableau (NYSE:DATA) and cloud computing behemoths such as Salesforce.com (NYSE:CRM). Tableau and Salesforce are primarily present in North America, biggest cloud computing market, and are therefore more susceptible to a slowdown in the region. To be fair, both these companies made major strides in overseas expansion in 2015. Qlik does not report its revenue share by geography, but it began expanding internationally much sooner than its peers. This could be a key differentiating factor for the company because outside of North America, cloud computing has still not taken off fully and there is a wealth of opportunity to be tapped in Europe and the emerging markets. Qlik’s existing international presence puts it in a perfect position to benefit from this trend.

Therefore, we reiterate our current price estimate of $36 for Qlik, which is about 30% higher than its current market price.

See our complete analysis for Qlik here

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research

1. Qlik Technologies Inc (QLIK) Hits New 12-Month Low After Analyst Downgrade, American Banking and Market News. January 15, 2015 [↩]
2. In Tech Sector, Brace for a Lot More Disappointment, Barron’s, January 16, 2015 [↩]