Citi analyst Walter Pritchard downgraded Splunk (SPLK) to Sell from Neutral with an unchanged price target of $98. The stock in premarket trading was down 4%, or $4.72, to $114.78.

The analyst sees "growth drivers plateauing" and "some warning signs in numbers." Splunk is facing increasing competition, adoption challenges caused by a "persistently unconventional" pricing model and market share in security nearing levels where others have had challenge breaking through, Pritchard tells investors in a research note.

Further, he believes the stock is "vulnerable" with a valuation in-line with high-growth software-as-a-service app players. The analyst recommends Salesforce (CRM) and ServiceNow Inc (NOW) or security peer Palo Alto Networks (PANW) over Splunk (SPLK).