Elastic (ESTC) Positioned as an AI Beneficiary, Guggenheim Says After Reiterating Buy

Elastic N.V. (NYSE:ESTC) is one of the  AI Stocks Investors Are Watching. On November 13, Guggenheim reiterated its Buy rating on the stock with a $122.00 price target. The firm is optimistic about the stock based on its expected revenue outperformance, GenAI tailwinds, and margin expansion.

According to firm projections, Elastic will exceed consensus expectations for second-quarter total and Cloud revenue, issue third-quarter guidance ahead of market expectations, and also lift its fiscal 2026 guidance by at least “the F2QE upside.”

Albeit limited in scope, the firm’s checks reflect how Elastic’s new capabilities resonating with customers and go-to-market changes are allowing the company to gain traction in all three areas of the business.

“Paired with the model setup, in our plausible case we expect F2Q Cloud growth stable q/q at 24% CC (vs. consensus +20%), sales-led subscription stable at 22% CC, and total revenue +18% CC, also in line with last quarter. We believe this should result in FY26 guidance being raised by over 1 point to +15% in CC and F3Q guide above the Street’s +12%. We see Elastic ultimately delivering FY26E total revenue +18% CC (19% reported), including Cloud +24% CC. Note that factored into guidance is the price increase on both Cloud and Self-Managed which took place this past May.”

The firm further noted how Elastic’s recent analyst day and virtual investor meeting has led them to remain confident in Elastic’s position as an AI beneficiary.

“Following Elastic’s recent analyst day and our virtual investor meeting, we remain confident that Elastic is an AI beneficiary rooted in architectural differentiation. We believe that another quarter of strong execution will instill more confidence in the company’s ability to attain its mid-term target for 15% baseline sales-led subscription growth with 5 percentage points of GenAI tailwinds over the next few years, and coupled with 20%+ Non-GAAP EBIT/FCF margin. With the company trading at 5.4× EV/FY27E Rev and 28× EV/FY27E FCF, we continue to view Elastic as an underappreciated asset. We maintain our Buy and $122 PT.”

Elastic N.V. (NYSE:ESTC) is a search AI company offering cloud-based solutions.

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