Elastic stock price target lowered to $96 at BofA on competitive risks

Investing.com - BofA Securities has lowered its price target on Elastic NV (NYSE:ESTC) to $96.00 from $104.00 while maintaining a Neutral rating on the stock. According to InvestingPro data, the stock is currently trading near its Fair Value, with analyst targets ranging from $75 to $143.

The firm cited increased competitive risks, particularly in AI workloads, as the primary reason for the adjustment. BofA noted that Elastic shares currently trade at a 22% discount to infrastructure software peers, with a multiple of 4.5x CY26E revenue compared to the peer average of 5.8x. The company maintains strong fundamentals with an InvestingPro Financial Health score of "FAIR" and holds more cash than debt on its balance sheet.

BofA’s revised price objective is now based on a 5.3x EV/CY26E revenue multiple, down from the previous 5.9x, reflecting the firm’s concerns about competition potentially weighing on Elastic’s revenue growth. Recent data shows revenue growth of 17% over the last twelve months, with analysts expecting continued growth of 12% in FY2026.

The analyst highlighted three key points regarding Elastic’s results: elevated scrutiny on the predictability of paid open-source models, Elastic’s participation in the AI theme, and the company’s FY26 revenue growth guidance.

BofA identified subscription revenue excluding monthly customers as a key metric to watch, suggesting that if growth accelerates to over 20% year-over-year from the previous quarter’s 19.3%, it could serve as a catalyst for the stock.

In other recent news, Elastic reported several key developments. UBS resumed coverage of Elastic with a Buy rating, though it lowered its price target from $148.00 to $95.00, reflecting a stable to slightly improved demand environment for the company’s services. Monness, Crespi, Hardt also upgraded Elastic to a Buy rating, setting a price target of $111.00, highlighting the company’s underperformance relative to other tech stocks. Additionally, Elastic launched a new service tier named Elastic Observability Logs Essentials, designed for developers and site reliability engineers, providing essential log analytics capabilities on its Cloud Serverless platform.

Further enhancing its offerings, Elastic introduced two vector search enhancements, ACORN and BBQ, aimed at improving performance and reducing costs for AI applications. Moreover, Elastic’s cloud service has achieved FedRAMP High "In Process" status on AWS GovCloud, marking a significant step in supporting sensitive U.S. federal government workloads. These recent developments underscore Elastic’s ongoing efforts to expand its product capabilities and address the needs of its diverse customer base.

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