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On Monday, Citi analysts reduced the price target for Elastic NV (NYSE: NYSE:ESTC) stock to $125 from the previous $160, as the stock trades near $81 after falling over 12% in the past week. Despite this adjustment, they maintained a Buy rating for the stock. According to InvestingPro data, Elastic maintains strong financial health with more cash than debt and liquid assets exceeding short-term obligations. The analysts noted that the company’s fiscal fourth-quarter results were mixed, with a weaker performance in the federal sector leading to a smaller-than-expected earnings beat.
The initial guidance for fiscal year 2026 was slightly below consensus expectations, though InvestingPro analysis shows that 9 analysts have recently revised their earnings upward for the upcoming period. Analysts attributed this conservative outlook to the new Chief Financial Officer’s commentary, which suggested a potential further deterioration in the macroeconomic environment beyond what Elastic NV has experienced so far.
Despite the cautious guidance, Citi analysts observed that the net revenue retention (NRR) and billings growth remained stable compared to the previous quarter, indicating underlying growth in the mid-to-high teens. They see potential for the company to exceed its guidance, which currently suggests a deceleration to 11% year-over-year in constant currency.
The analysts adjusted their estimates down by two percentage points but remain optimistic about the stock. They cited reasonable enterprise value to free cash flow multiples and the potential for increased monetization of Generative AI as factors supporting their Buy rating.
In other recent news, Elastic NV released its fourth-quarter fiscal year 2025 results, reporting total revenues of $388.4 million, which surpassed expectations. Despite this, the company provided a revenue forecast for fiscal year 2026 that fell short of market expectations, citing macroeconomic pressures and challenges within the U.S. public sector. Analysts have responded with mixed adjustments to their price targets. DA Davidson maintained a Neutral rating with a $75 target, while TD Cowen lowered its target to $90, citing a miss in cloud revenue. RBC Capital also adjusted its target to $115, maintaining an Outperform rating, while Wedbush reduced its target to $110, also with an Outperform rating. Cantor Fitzgerald cut its price target to $92, keeping a Neutral rating due to a mixed financial quarter and longer sales cycles in the U.S. Federal business. Elastic’s management remains optimistic about its sales execution and enterprise customer base, identifying Generative AI as a potential growth driver. However, analysts express caution, noting the need for Elastic to demonstrate a recovery in its cloud business and navigate macroeconomic challenges effectively.
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