Elastic N.V. (ESTC) Sees Price Target Cut on Weak Federal Growth, But Generative AI Still a Bright Spot

We recently published a list of 10 AI Stocks on Wall Street’s Radar. In this article, we are going to take a look at where Elastic NV. (NYSE:ESTC) stands against other AI stocks on Wall Street’s radar.

On June 2^nd, Citi analyst Tyler Radke lowered the price target on Elastic NV. (NYSE: ESTC) to $125.00 (from $160.00) while maintaining a “Buy” rating. The price target cut follows Elastic’s mixed fourth quarter results, particularly weak performance in the federal sector that led to a smaller-than-expected earnings beat.

The initial guidance for fiscal year 2026 was also slightly below expectations, with analysts hinting at the Chief Financial Officer’s commentary related to a potential (further) deterioration in the macroeconomic environment beyond what Elastic has experienced as yet.

A group of software engineers working in an open, futuristic office.

Citi analysts further observed that net revenue retention (NRR) and billings growth remained stable for Elastic in comparison to the previous quarter, reflecting underlying growth in the mid-to-high teens. As such, the company has the potential to exceed its guidance, they noted.

They further adjusted their estimates down by two percentage points. However, they remain optimistic about the stock due to reasonable enterprise value to free cash flow multiples and the likelihood of increased monetization of Generative AI, justifying the buy rating.

Elastic N.V. is a search AI company offering cloud-based solutions.

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Disclosure: None. This article is originally published at Insider Monkey.