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Splunk Inc. (NASDAQ: SPLK) saw its shares slide on Thursday after it caught a downgrade on the basis that it may be facing transition challenges. Ultimately, this firm believes that Splunk’s transition into the cloud is creating complexity from a mixed go-to-market model with competition emerging on a few different fronts.

Wedbush downgraded Splunk to a Neutral rating from Outperform and lowered its price target to $63 from $72.

The downgrade came following customer and partner checks, which Wedbush used to better understand potential sources of Splunk’s first-quarter weakness and issues posed by its strategic pivot to the cloud. The firm believes that management likely has enough visibility that it can continue its beat-and-raise approach, but the magnitude of Splunk’s outperformance likely will be less than in the past. Also, the company’s lack of bookings disclosures makes for opaque results and a trust-me story, making shares vulnerable if quarterly metrics aren’t uniformly positive.

In terms of emerging competition, Wedbush had this to say:

We think competitive threats have been fairly muted in the past, but our checks at SplunkLive! in Anaheim yesterday are pointing to incremental competition for Splunk on several fronts. … We believe Splunk remains differentiated through superior capabilities, but the company’s data-volume-driven pricing model — perceived as expensive by customers — is becoming more of a sticking point in competitions.

Transition to cloud and changes to the sales playbook could be creating sales disruption. Wedbush’s checks indicate Splunk Cloud deals have lower average selling prices for several reasons, and the company’s efforts to push Splunk Cloud are likely creating a bookings headwind.

Shares of Splunk were last seen down 1.6% at $56.69 on Thursday, with a consensus analyst price target of $72.59 and a 52-week range of $60.60 to $69.23.