Elastic's Growth Story Intact Despite SaaS Headwinds, Wedbush Says

MT Newswires Live02-28

Elastic's (ESTC) growth story remains strong even as broader software as a service, or SaaS, headwinds continue to pressure the stock, Wedbush Securities said in a note Friday.

The company reported fiscal Q3 earnings and revenue that beat expectations, and issued full-year revenue guidance above market estimates, though Q4 guidance came in lighter than some investors hoped, according to analysts, including Dan Ives, who view it as "conservative."

The analysts said revenue rose as more customers adopted Elastic's Search AI platform. The company saw growth in large enterprise customers, with strong momentum in AI-related use cases, while cloud revenue also grew solidly, driven by rising demand for generative AI applications, the note said.

For the full year, Elastic raised its revenue and earnings outlook again, reflecting continued customer demand and growth in subscriptions. Customers are turning to the company for AI data management, "driving incremental growth over time despite facing a significant SaaS storm that continues to weigh on shares," analysts said.

Wedbush Securities lowered its price target on Elastic to $74 from $90, while keeping its outperform rating.

Shares of the company fell past 17% in recent trading Friday.

Price: 51.00, Change: -10.58, Percent Change: -17.18

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