Wang & Lee Group board approves 250-to-1 reverse share split
On Friday, Guggenheim maintained a Buy rating on Elastic NV (NYSE: NYSE:ESTC), a $10.5 billion market cap company, and raised the price target to $136 from $130, following a strong financial performance. According to InvestingPro data, the stock currently trades at a P/E ratio of 173, reflecting high growth expectations. The firm’s analysts highlighted Elastic’s impressive beat and raised guidance in the final quarter of FY25, noting a swift recovery in sales execution to levels seen before the first quarter’s guidance reduction. Elastic Cloud’s growth accelerated to 26% year-over-year, indicating a significant increase in New Annual Recurring Revenue (ARR) and resulting in stable total revenue growth at 17%, which is 4 percentage points above consensus.
Elastic’s FY25 guidance was increased by 2 percentage points to 17%, with fourth-quarter guidance notably strong at 15% in constant currency, surpassing consensus by 2 points despite an anticipated 1-point headwind from an additional day in the comparison period. Interim CFO Eric Prengel attributed the third-quarter outperformance to solid customer commitments and consumption across enterprise and commercial segments, including continued overconsumption by some large customers. The updated guidance does not assume this overconsumption will continue.
The company’s CEO, Ash Kulkarni, emphasized Elastic’s growing role in the GenAI market, with customers selecting Elastic as their runtime platform for building applications, not only for its vector database capabilities but also for its comprehensive search, vector embedding, and domain-intelligent ELSER models. The company’s strong market position is supported by impressive financial metrics, including a 74% gross margin and annual revenue of $1.38 billion. The integration of GenAI platform capabilities is also beginning to support observability and Security Information and Event Management (SIEM) use cases as part of a platform consolidation strategy.
In terms of profitability, Elastic is expected to achieve over 15% in operating margin and a Free Cash Flow (FCF) margin slightly higher, based on the raised guidance. Prengel indicated that while margin expansion might be less in FY26 due to investments in GenAI, robust New ARR trends suggest the potential for Elastic to accelerate growth to 18% in FY26, up from 17% this year.
Elastic’s new CFO, Navam Welihinda, who previously held positions at Hashicorp and IBM (NYSE:IBM), officially began his role on February 28, 2025. Guggenheim’s price target increase reflects a more optimistic revenue forecast in what they consider a plausible scenario for Elastic. InvestingPro analysis reveals 10+ additional investment insights and a comprehensive Fair Value assessment for ESTC, available exclusively to subscribers. The Pro Research Report offers deep-dive analysis of Elastic’s financial health, which currently rates as "Fair" with a score of 2.32 out of 5.
In other recent news, Elastic NV reported its Q1 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.63, compared to the forecasted $0.47. The company also exceeded revenue projections, reporting $382 million against the expected $368.71 million, marking a 17% increase year-over-year. Additionally, Elastic’s cloud revenue, which now constitutes 47% of total revenue, grew by 26%, reflecting the company’s successful transition towards cloud-based solutions. In terms of analyst activity, Canaccord Genuity and Piper Sandler both raised their price targets for Elastic NV to $135, citing the company’s strong financial performance and potential growth in the GenAI landscape. Both firms maintained positive ratings, with Canaccord keeping a Buy rating and Piper Sandler an Overweight rating. The analysts highlighted Elastic’s accelerating revenue growth and its strategic positioning in the market, particularly in Software (ETR:SOWGn) as a Service (SaaS) and GenAI technologies. These developments suggest a continued confidence in Elastic’s ability to maintain its growth trajectory and capitalize on emerging technological trends.
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