Elastic stock rating reiterated at Outperform by William Blair

Investing.com - William Blair has reiterated an Outperform rating on Elastic NV (NYSE:ESTC), an $8.67 billion market cap company, following the company’s investor day and customer conference. According to InvestingPro data, the company maintains a "Fair" financial health score, with analyst price targets ranging from $90 to $150.

The firm expressed positive sentiment about Elastic’s positioning in the AI and search landscape, noting it represents the company’s fastest-growing solution set. William Blair also highlighted Elastic’s opportunity to gain additional market share in observability and security markets.

Elastic has updated its financial targets for fiscal 2026, now expecting 15% revenue growth (up from 14% previously) and a 16.3% operating margin (versus 16.0% prior). For the medium term, the company projects 20% growth in core sales-led subscription revenue, with 15% coming from its core platform and 5% from GenAI solutions adoption.

The company announced a $500 million share repurchase program, with 50% to be executed in fiscal 2026. Management indicated plans to use at least 50% of free cash flow for share buybacks in the longer term, unless higher ROI opportunities emerge. The company’s strong current ratio of 2.09 and healthy balance sheet position support this capital return strategy.Get deeper insights into Elastic’s financial health and growth prospects with InvestingPro, which offers exclusive access to detailed financial metrics and expert analysis through comprehensive Pro Research Reports.

William Blair noted that Elastic customers using three solutions exhibit a 12-times increase in spending compared to single-solution customers, demonstrating significant expansion potential within the existing customer base.

In other recent news, Elastic has announced a $500 million share repurchase program, which was approved by its Board of Directors. This program has no expiration date and allows the company to buy back its outstanding ordinary shares based on share price and market conditions. Additionally, Elastic has introduced a new GPU-accelerated inference service to enhance AI workflows, leveraging NVIDIA GPUs to improve performance for applications requiring vector database capabilities. Cantor Fitzgerald has raised its price target for Elastic to $94 while maintaining a Neutral rating, citing increased commitments and sales-led growth following Elastic’s Analyst Day. Meanwhile, Goldman Sachs has lowered its price target to $100, maintaining a Neutral rating, and noted Elastic’s mid-term framework targeting a "Rule of 40+" performance metric. This framework includes a projected core growth rate and contributions from generative AI initiatives. These developments reflect Elastic’s ongoing strategic initiatives and market positioning.

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