Elastic:Guggenheim maintains Buy, raises PT to $122 from $107.

Elastic:Guggenheim maintains Buy, raises PT to $122 from $107.

Guggenheim Securities has maintained its "Buy" rating on Elastic NV (NYSE: ESTC) while raising its price target to $122 from $107. This move reflects the brokerage firm's positive outlook on the company's performance and growth prospects. The new price target represents significant upside from the current price of $87.79, with analyst targets ranging from $85 to $143 [1].

Elastic reported strong financial results for the first quarter of fiscal year 2026, with revenue increasing by 20% year-over-year (YoY) to $415 million, beating Wall Street's expectations of $397.2 million [2]. The company's earnings per share before certain costs reached 60 cents, significantly higher than the forecasted 42 cents [2].

Key drivers of Elastic's growth include its focus on AI integration and cloud services. Elastic Cloud revenue jumped 24% YoY to $196 million, accounting for 47% of total revenue [2]. The company's AI-driven products, such as the Elastic AI SOC Engine, have attracted over 2,200 customers using generative AI (GenAI) workloads [3].

Guggenheim cited Elastic's significant outperformance in revenue and profit, with the company guiding its fiscal second quarter above Street expectations and raising full-year revenue guidance. The strong results came against what Guggenheim described as "depressed expectations." According to InvestingPro data, the company has achieved 17.4% revenue growth over the last twelve months, with 19 analysts recently revising their earnings estimates upward [1].

Elastic's performance was broad-based across both commitments and consumption, driven by GenAI search initiatives that caused search revenue to accelerate for another consecutive quarter. Over 2,200 Cloud customers are using Elastic for GenAI, including 330 spending over $100,000 in annual contract value. Platform consolidation in the security/SIEM sector and a 5% increase in list pricing for both Cloud and Self-Managed services also contributed to the fiscal first-quarter upside [1].

Guggenheim views Elastic’s total revenue guidance of 13% in constant currency (raised from 11%) and maintained non-GAAP operating margin of 16% as conservative, expecting the company to ultimately outperform these expectations. The brokerage firm's positive outlook on Elastic is supported by the company's strategic partnerships with Dell and Nvidia, which have strengthened its AI data platform [1].

Elastic's strong financial performance and strategic initiatives position it as a promising investment opportunity. The company's AI-driven product roadmap and robust enterprise traction counterbalance potential risks associated with macroeconomic headwinds. For investors, Elastic represents a strategic buy opportunity, aligning with the $1.2 trillion global AI market’s projected growth.

References:
[1] https://www.ainvest.com/news/elastic-canaccord-genuity-raises-pt-120-maintains-buy-rating-2508/
[2] https://www.investing.com/news/earnings/elastic-shares-surge-16-as-strong-demand-for-ai-tech-drives-q1-earnings-revenue-4215439
[3] https://www.ainvest.com/news/elastic-maintains-strong-performance-analyst-raises-price-target-150-00-2508/