On Thursday, Oppenheimer maintained its positive stance on Elastic NV (NYSE: NYSE:ESTC) shares, increasing the price target to $150 from $130 while keeping an Outperform rating on the stock.
The firm anticipates that Elastic will surpass its first-quarter fiscal year 2025 revenue guidance, which was set between $343 million and $345 million, representing a 17.1% year-over-year increase. This forecast is slightly above the consensus estimate of $344.7 million.
The optimism from Oppenheimer follows Elastic's robust fourth-quarter fiscal year 2024 earnings, where the company demonstrated an accelerating growth in cloud revenue, which surged by 31.7% compared to the same period the previous year. Additionally, the company saw significant growth in its customer base, with more than 100,000 customers contributing to a 14.7% increase year-over-year.
Elastic's Elasticsearch Service on Elastic Cloud (ESRE) also showed strong performance, now serving over 1,000 paying customers. Oppenheimer believes that Elastic will continue its growth trajectory into the first quarter, driven by consistent demand from annual cloud customers and diminishing impacts from previous cloud optimizations.
However, the firm also notes that potential upside may be limited due to ongoing economic pressures affecting small and medium-sized businesses (SMBs), which represent a considerable portion of Elastic's monthly cloud revenue.
For the upcoming quarter, key areas of focus will include the growth in cloud and subscription revenues, which in the fourth quarter expanded by 21.4% year-over-year, as well as the growth in larger customers contributing more than $100,000.
Other metrics of interest are the net dollar expansion rate (NDER), which stood at 110% in the fourth quarter, marking a 1-point increase quarter-over-quarter, and the operating margin/free cash flow margin (OM/FCFM), which were reported at 8.6% and 17.9%, respectively, in the previous quarter.
In other recent news, Elastic NV has been the focus of several analyst firms following its strong fourth-quarter performance. Citi raised the company's price target to $155, citing accelerated top-line growth, significant consumption trends, and proficient execution of the new ESRE product.
The firm also noted Elastic's success in crossing the 1,000 paid customer threshold. Meanwhile, Piper Sandler reaffirmed its Overweight rating on Elastic NV shares, emphasizing the company's robust fiscal year-end performance and significant acceleration in cloud growth.
Stifel adjusted the price target for Elastic NV shares to $120, while maintaining a Buy rating. The firm highlighted the company's success in the self-managed offerings and software-as-a-service (SaaS) segment, as well as the potential for significant opportunities in generative AI. In contrast, Canaccord Genuity reduced its price target to $125 but reaffirmed a Buy rating, citing the company's positive trajectory and strong product momentum.
Lastly, RBC Capital maintained its Outperform rating and $135.00 price target for Elastic NV. The firm acknowledged Elastic's impressive year-end performance, including an increase in Elastic Cloud growth and the widespread adoption of Elastic's GenAI solutions. These developments are part of recent trends impacting the company and are essential for investors to consider.
InvestingPro Insights
As Elastic NV (NYSE: ESTC) continues to capture the attention of analysts and investors alike, recent data from InvestingPro offers additional insights into the company's financial health and market performance. InvestingPro Tips highlight that 11 analysts have revised their earnings upwards for the upcoming period, indicating a positive sentiment surrounding the company's future profitability. Additionally, Elastic operates with a moderate level of debt and has liquid assets that exceed short-term obligations, suggesting a solid financial position for navigating market uncertainties.
In terms of market valuation, Elastic is currently trading at a high earnings multiple with a P/E ratio of 221.68 and a Price / Book ratio of 15.92 as of the last twelve months as of Q4 2024. While these metrics may suggest a premium valuation, the company's strong return over the last year, with a 70.42% price total return, underscores the market's optimistic outlook on its growth prospects. Moreover, with a revenue growth of 18.55% over the last twelve months and a gross profit margin of 74.07%, Elastic demonstrates robust financial performance that could justify its valuation in the eyes of many investors.
For readers interested in a deeper dive into Elastic's financial metrics and future outlook, InvestingPro offers additional tips and insights. To explore these further and benefit from the wealth of information available, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With a total of 12 additional InvestingPro Tips available for Elastic, investors can gain a comprehensive understanding of the company's position and potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.