On Monday, the stock of Elastic, which rose by 1.71%, experienced an upswing ahead of its upcoming quarterly earnings announcement. This increase followed an analyst’s reaffirmation of a positive outlook on the company, known for its AI-driven business software solutions. In response, investors raised the stock’s price by 1.7%, a notable contrast to the 0.3% dip in the S&P 500 index.
Reaffirmed Optimistic Analyst Perspective
On that same day, Blair Abernathy from Rosenblatt issued a new research note concerning Elastic. In his report, he reiterated a buy recommendation for the AI stock, maintaining a price target of $136 per share. This projection suggests a nearly 27% increase from the most recent closing price.
Elastic is preparing to disclose its fiscal 2025 first-quarter results this Thursday after the market closes. Abernathy expressed confidence that the company would meet expectations, despite facing challenges such as prolonged enterprise sales cycles, scrutiny over budgets for digital transformation initiatives, and weakness in the small and mid-sized business sectors.
While these factors might seem unfavorable, Abernathy is forecasting a robust 28% revenue growth for Elastic’s Cloud offering, not far off from the 32% growth reported in the previous fourth quarter.
Expectations for Revenue Growth
In his analysis, Abernathy noted that Elastic’s clients have reduced their optimization efforts, shifting their focus to aspects like cost management, operational efficiency, and tool consolidation.
Overall, analysts monitoring Elastic stock anticipate the company to report a 17% increase in year-over-year revenue growth. However, they expect net income per share to remain steady, matching the $0.25 reported in the same quarter last year.
