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On Friday, Elastic NV (NYSE:ESTC) shares dipped in after-hours trading following the release of their fourth quarter fiscal year 2025 results, with the stock trading at $81.69, down from its 52-week high of $123.96. DA Davidson analysts maintained a Neutral rating and a price target of $75.00 on the company’s stock. Elastic’s revenue growth for the quarter was stable at 17% year-over-year and surpassed expectations, but the company provided a revenue forecast that fell short of consensus, prompting the decline in share value.
The company’s management expressed a positive outlook on the business and its pipeline despite the conservative guidance. They highlighted momentum in sales execution, particularly with larger enterprise customers, supported by strong fundamentals including a healthy current ratio of 1.92 and more cash than debt on its balance sheet. Additionally, management identified Generative AI as a potential growth driver for Elastic. InvestingPro analysis shows the company maintains a robust gross profit margin of 74%.
DA Davidson’s analysts chose to retain their Neutral stance on Elastic stock, citing the less optimistic growth outlook. The $75.00 price target remains unchanged, though it’s worth noting that InvestingPro data shows 22 analysts have recently revised their earnings expectations upward, with analyst targets ranging from $75 to $160. The firm’s current assessment reflects recent financial disclosures and market expectations, with InvestingPro identifying several positive indicators for the company.
The report from DA Davidson comes as investors and analysts alike weigh the potential impacts of revenue forecasts on stock performance. Elastic’s emphasis on expanding its enterprise customer base and leveraging Generative AI technology indicates strategic initiatives that could influence future growth trajectories. For deeper insights into Elastic’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of the company’s financial health, market position, and growth potential among 1,400+ top stocks.
In other recent news, Elastic NV reported total revenues of $388.4 million for the fourth quarter of fiscal year 2025, surpassing expectations and its own guidance. Despite this strong performance, the company’s cloud revenue slightly missed projections, contributing to a cautious revenue forecast for fiscal year 2026. Analysts from TD Cowen, RBC Capital, Wedbush Securities, and Cantor Fitzgerald have adjusted their price targets for Elastic, reflecting concerns about cloud revenue and broader economic pressures, particularly within the U.S. public sector. TD Cowen lowered its target to $90, maintaining a Hold rating, while RBC Capital reduced its target to $115 but kept an Outperform rating. Wedbush also cut its target to $110, maintaining an Outperform rating, and Cantor Fitzgerald adjusted its target to $92, retaining a Neutral rating.
Elastic’s management has expressed optimism about its self-managed solutions and GenAI capabilities, yet remains cautious about potential macroeconomic challenges. The company has observed longer sales cycles in the U.S. Federal market, which have impacted its revenue outlook. Despite these challenges, Elastic’s gross and non-GAAP operating margins exceeded expectations, indicating effective cost management. The company is also focusing on expanding its security sales team to enhance its market share in the security space. Investors are keeping a close watch on how these developments and the strategic direction under the new CFO, Navam Welihinda, will impact Elastic’s financial trajectory in the coming quarters.
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