Street Calls of the Week
Investing.com - Goldman Sachs has lowered its price target on Elastic NV (NYSE:ESTC) to $100.00 from its previous target while maintaining a Neutral rating on the stock. According to InvestingPro data, analyst targets range from $90 to $150, with the stock currently trading at $81.55. The company maintains strong financial health, with liquid assets exceeding short-term obligations.
The adjustment follows Goldman Sachs’ attendance at Elastic’s 2025 Investor Day, where the company outlined its mid-term framework targeting a "Rule of 40+" performance metric. This framework blends a projected 15%+ core growth rate with an additional 5%+ growth contribution from generative AI initiatives, alongside operating margins exceeding 20%. The company’s current revenue growth stands at 17.4%, with a healthy gross profit margin of 75.3%.
Elastic announced a $500 million stock buyback authorization and introduced several new product offerings, including Elastic Inference Service for GPU-accelerated model serving and Agent Builder for creating data-first applications. The company also revealed its acquisition of Jina AI to incorporate multilingual and multimodal embedding models into its platform.
In its observability and security segments, Elastic unveiled Streams and Significant Events features to organize logs and surface issues, along with Elastic Workflows for automated response management. The company also detailed its 18-month go-to-market transformation involving resegmentation, specialist overlays, and standardized sales approaches.
Despite these developments, Goldman Sachs noted that Elastic’s updated fiscal year 2026 guidance of 15% growth still indicates deceleration, and while AI is providing "a measurable expansion tailwind," the firm remains cautious as Elastic operates across "three large and highly competitive markets." InvestingPro analysis reveals that while the company isn’t currently profitable, analysts expect positive earnings this year. Get deeper insights and access to comprehensive financial metrics with the Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Elastic announced a $500 million share repurchase program, a move approved by its Board of Directors without an expiration date. This program allows the company to buy back its outstanding ordinary shares, with the timing and volume of repurchases influenced by market conditions and other factors. Additionally, Elastic has introduced a new GPU-accelerated inference service, known as the Elastic Inference Service, to enhance its AI workflows. This service utilizes NVIDIA GPUs to improve performance for applications requiring vector database capabilities.
In a strategic move to bolster its AI search capabilities, Elastic has completed the acquisition of Jina AI, a company known for its expertise in open-source multimodal and multilingual embeddings. The acquisition is expected to enhance Elastic’s vector search and retrieval-augmented generation offerings. Furthermore, Elastic has extended its AutoOps monitoring and management service to enterprise customers with self-managed deployments at no additional cost. This extension allows these customers to benefit from real-time diagnostics and performance tuning while maintaining data sovereignty.
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