UBS raises Elastic stock price target to $148 from $140

On Friday, UBS analyst Austin Dietz increased the price target on Elastic NV (NYSE:ESTC) shares to $148 from the previous target of $140, while reiterating a Buy rating on the company’s stock. The adjustment came after Elastic reported third-quarter fiscal year 2025 results that exceeded expectations, sending its stock up by 15% in after-hours trading. With a market capitalization of nearly $12 billion and trading at a P/E ratio of 194, InvestingPro data indicates the stock is currently trading above its calculated Fair Value, though analysts maintain positive outlook with targets ranging from $93 to $150.

Elastic’s third-quarter performance was marked by a strong 26% constant currency (c/c) growth in Cloud revenue, which is an improvement from the 25% c/c growth in the second quarter. The company’s total revenue exceeded forecasts by 3.5%, the largest beat in nearly three years and surpassing the 2.9% beat in the previous quarter. The robust revenue growth was accompanied by a significant year-over-year increase in remaining performance obligations (RPO), which grew by 15%, adding $88 million sequentially, a substantial rise from the $7 million increase in the second quarter. InvestingPro data shows the company maintains impressive revenue growth of 18.7% over the last twelve months, with a healthy gross profit margin of 74%.

The company also reported healthy adjusted free cash flow (FCF) margins of 26%. This financial strength reflects Elastic’s recovery from earlier disruptions in its go-to-market (GTM) strategy and indicates improved execution. According to Dietz, the consistent improvement in Elastic’s Cloud revenue, particularly against the backdrop of mixed results from hyperscalers, suggests that artificial intelligence and enterprise search relevance (AI/ESRE) use cases may be contributing to the company’s revenue growth. InvestingPro analysis reveals several positive indicators, including a strong current ratio of 1.99 and more cash than debt on its balance sheet, suggesting solid financial health to support its AI initiatives.

Dietz’s commentary highlighted the belief that Elastic is effectively capitalizing on its AI Search opportunities, which bolsters the firm’s confidence in the stock. The analyst’s positive outlook is based on Elastic’s performance over the last two quarters, which has demonstrated the company’s ability to exceed Cloud revenue expectations and execute its business strategy successfully. For deeper insights into Elastic’s AI potential and financial metrics, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which includes detailed analysis of the company’s growth trajectory and market position.

In other recent news, Elastic NV reported a strong fiscal third-quarter performance, surpassing expectations with robust enterprise consumption. The company’s cloud revenue exceeded predictions by $6.3 million, driven by increased usage among large customers. Elastic’s fiscal year 2025 guidance has been revised upward by several analyst firms, including RBC Capital Markets and Truist Securities, reflecting confidence in its strategic direction and GenAI technology. RBC Capital Markets raised its price target to $140, while Truist Securities set theirs at $145, both maintaining positive ratings on the stock.

Guggenheim also increased its price target to $136, citing Elastic’s strong financial performance and a 26% year-over-year growth in Elastic Cloud. Canaccord Genuity adjusted its price target to $135, highlighting the company’s potential to capitalize on the growing demand for GenAI technologies. The appointment of a new Chief Financial Officer is expected to support Elastic’s growth and operational efficiency.

Analysts have noted Elastic’s recovery in sales execution and the company’s strategic focus on expanding its customer base. Despite the positive outlook, some analysts remain cautious, pointing out the modest growth in sales and marketing and the need for further investments. Elastic’s management remains optimistic, with plans to invest in GenAI opportunities throughout fiscal year 2026.

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