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Investing.com - Wells Fargo reduced its price target on Elastic N.V. (NYSE:ESTC) to $75.00 from $90.00 on Friday, while maintaining an Equal Weight rating on the stock. The new target represents a 9% downside from Elastic ’s current price of $82.08, with the stock having already declined nearly 10% over the past week according to InvestingPro data.
The firm cited decelerating top-line growth in the mid-teens and execution risk around market share gains as key factors offsetting potential upside from generative AI, upward revisions to guidance, and improving profitability. This assessment aligns with Elastic’s current revenue growth of 16.98%, though InvestingPro data shows analysts expect the company to become profitable this fiscal year despite not being profitable over the last twelve months.
Wells Fargo noted that Elastic currently trades at 3.6x CY27E EV/Sales, below the broader infrastructure peer group average of 6.7x CY27E EV/Sales.
The investment bank believes this valuation is justified given the balance between growth concerns and potential positive catalysts for the company.
The new price target is based on a CY27E 3.8x EV/Sales multiple, reflecting Wells Fargo’s updated outlook on Elastic’s future performance.
In other recent news, Elastic N.V. reported strong second-quarter results for fiscal 2026, surpassing both earnings and revenue expectations. The company achieved an earnings per share (EPS) of $0.64, which was higher than the anticipated $0.58, and recorded revenue of $423 million, slightly above the forecasted $418.23 million. Despite these positive results, several analyst firms adjusted their price targets for Elastic. Stifel lowered its target from $134 to $108, citing slower-than-expected SaaS growth, while maintaining a Buy rating. Guggenheim also reduced its target to $116 from $122, noting mixed results and decelerating revenue growth across all segments, yet also maintaining a Buy rating. BofA Securities adjusted its target to $90 from $111, highlighting decelerating growth, though Elastic’s revenue and non-GAAP operating income exceeded both BofA’s and Street estimates. These developments reflect mixed sentiments among analysts despite Elastic’s better-than-expected earnings performance.
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