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On Friday, Stifel analysts revised their price target for Elastic NV (NYSE:ESTC) to $38.00, down from the previous $42.00, while maintaining a Buy rating on the shares. The adjustment follows Elastic’s reported revenue, which exceeded expectations by more than 3%, similar to the second quarter’s performance. This success was attributed to a combination of factors, including a diverse portfolio strength, effective sales execution following earlier go-to-market (GTM) issues, and robust consumption trends, particularly among the company’s largest customers. Additionally, advancements in generative AI (genAI) have provided positive tailwinds for the company. According to InvestingPro data, Elastic has demonstrated strong momentum with revenue growth of 18.71% over the last twelve months, while maintaining a healthy gross profit margin of 74.13%.
Elastic’s management has responded to the revenue beat by revising the full-year 2025 (FY25) revenue guidance upwards, which now aligns closely with the original forecast issued prior to the GTM challenges encountered in the first quarter. Despite this upward revision, analysts at Stifel anticipate limited quarter-over-quarter growth in SaaS additions for the fourth quarter, due to foreign exchange headwinds and a shorter quarter by three days. The company’s strong financial position is reflected in InvestingPro metrics, showing a current ratio of 1.99 and more cash than debt on its balance sheet, indicating robust liquidity.
Looking further ahead, Elastic’s management has offered a preliminary profitability outlook for fiscal year 2026 (FY26). They expect only a modest expansion in operating margin as the company plans to invest in areas that will fuel growth, particularly in opportunities related to genAI.
Stifel’s analysts believe that Elastic’s improved GTM execution, strong consumption trends, the significant potential of genAI, and continued operational efficiency position the company for relative outperformance in the upcoming quarters. The analysts have set a price target of $38, which is based on an approximately 8x multiple of the calendar year 2026 estimated enterprise value to revenue of $1.875 billion.
In other recent news, Elastic NV reported third-quarter fiscal year 2025 results that exceeded expectations, showcasing a 26% growth in Cloud revenue and a significant increase in remaining performance obligations. This robust performance led to several analyst firms raising their price targets for Elastic. UBS increased its target to $148, citing strong financial results and improved execution in the company’s go-to-market strategy. TD Cowen raised its target to $125, noting a surge in enterprise consumption, although it maintains a cautious outlook due to low visibility into quarterly usage. RBC Capital Markets adjusted its target to $140, highlighting Elastic’s recovery in sales execution and momentum in GenAI technology. Truist Securities raised its target to $145, emphasizing the company’s strong demand for search and GenAI use cases and optimistic future prospects. Guggenheim increased its target to $136, acknowledging Elastic’s swift recovery in sales execution and promising growth in New Annual Recurring Revenue. Elastic’s recent financial achievements and strategic initiatives have garnered positive sentiment from these analyst firms, reflecting confidence in the company’s direction and potential for continued growth.
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