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Investing.com - Rosenblatt has reiterated its Buy rating and $130.00 price target on Elastic NV (NYSE:ESTC) following the company’s second-quarter results that exceeded revenue estimates. This target represents a 58% upside from the current price of $82.08, significantly higher than InvestingPro’s Fair Value assessment, which suggests the stock is currently fairly valued.
Elastic reported Q2 revenue growth of 16% year-over-year, approximately 1.8% above Rosenblatt’s estimates. This aligns with the company’s 17% revenue growth over the last twelve months, according to InvestingPro data. The company’s Elastic Cloud segment showed stronger performance with 22% year-over-year growth, supported by larger customer acquisition and broader solution adoption. Despite these positive results, the stock has taken a significant hit, dropping 9.6% over the past week.
The firm noted that Q2 results further validate Elastic’s improved go-to-market execution following challenges last year, along with successful implementation of its technology platform strategy. Rosenblatt highlighted that 2,450+ Elastic Cloud customers are now using the platform for generative AI, contributing to healthy Search growth during the quarter.
Elastic’s Q3 guidance exceeded pre-quarter consensus by the most significant margin in nearly four years. The company’s full-year outlook now projects approximately 16% growth to around $1,718 million, which is $34 million above the prior consensus of $1,684 million, with operating margin improving to 16.25% from 16.0%. InvestingPro data shows Elastic holds more cash than debt on its balance sheet and maintains a healthy current ratio of 1.97, indicating strong liquidity to support its growth initiatives.
Based on the Q2 results, Rosenblatt has made marginal adjustments to its FY26-27 growth forecasts while maintaining its $130 price target and Buy rating at the current price level. While Elastic is not profitable over the last twelve months, InvestingPro data indicates that net income is expected to grow this year, with analysts predicting the company will become profitable. Discover 5 more exclusive InvestingPro Tips and comprehensive analysis in the Pro Research Report available for ESTC and 1,400+ other US equities.
In other recent news, Elastic NV has seen several updates from financial analysts following its latest earnings report. The company’s second-quarter results were mixed, with total revenue and Cloud revenue surpassing expectations, although growth rates showed signs of deceleration. Guggenheim noted a 15% revenue growth in constant currency, with Sales-Led and Cloud revenue increasing by 17% and 22%, respectively, but each segment experienced a slowdown compared to the previous quarter. Despite the positive earnings, several firms have lowered their price targets for Elastic due to growth concerns.
Jefferies reduced its price target to $105, citing a slowdown in key metrics like cloud revenue and subscription revenue. Wells Fargo also lowered its target to $75, pointing out risks related to market share gains and decelerating top-line growth. Stifel cut its price target to $108, referencing slower-than-expected SaaS growth. Additionally, BofA Securities adjusted its target to $90, maintaining a Neutral rating as the company’s results showed both strengths and weaknesses. Despite these adjustments, several firms, including Jefferies and Stifel, continue to maintain a Buy rating on Elastic.
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