Update shared on27 Aug 2025
Fair value Decreased 0.81%Elastic’s consensus price target saw a modest downgrade to $108.65 as analysts weighed intensifying AI competition and conservative CFO guidance against the company’s AI and subscription growth potential, with shares remaining attractively valued versus software peers.
Analyst Commentary
- Bullish analysts note Elastic is favorably positioned for revenue upside and generative AI optionality, highlighting potential acceleration in key subscription revenue metrics.
- Several analysts have reduced price targets due to increasing competition in AI workloads, which may impact Elastic's revenue growth trajectory.
- Conservative guidance is expected from the new CFO, even as firms anticipate a potential "beat and raise" in upcoming quarterly results.
- Some see compelling value in Elastic shares given their underperformance relative to AI peers and depressed valuation multiples versus other software companies.
- Monitoring subscription revenue growth, particularly excluding monthly customers, is viewed as a key catalyst for re-rating the stock if growth accelerates meaningfully.
What's in the News
- BofA lowered its price target on Elastic from $104 to $96 while maintaining a Neutral rating, citing concerns that intensifying competition for AI workloads could restrain revenue growth; subscription revenue growth (excluding monthly customers) will be a key metric to watch in the upcoming earnings report (BofA, Periodicals).
- Elastic launched Elastic Observability Logs Essentials, a new serverless, cost-optimized log analytics solution for SREs and developers, offering scalable, fast, and visual log analysis with automatic scaling and zero operational overhead (Key Developments).
- The company introduced Elastic AI SOC Engine (EASE), a serverless, AI-driven security product that integrates with existing SIEM and EDR tools, offering agentless integrations, AI-powered alert correlation, and natural language queries to enhance security operations without requiring system migration (Key Developments).
- Elastic announced significant upgrades to Elasticsearch, including general availability of advanced ES|QL features (such as lookUP JOIN and Cross-Cluster Search) that increase query performance, scalability, and observability, plus over 30 internal optimizations for lower latency and resource use in large-scale environments (Key Developments).
- Major advances in Elastic vector search were released: the ACORN algorithm delivers up to 5x speed improvements for filtered vector queries, and Better Binary Quantization (BBQ) is now the default for high-dimensional dense vectors, boosting ranking quality and performance while reducing costs for AI applications (Key Developments).
Valuation Changes
Summary of Valuation Changes for Elastic
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $109.54 to $108.65.
- The Future P/E for Elastic remained effectively unchanged, moving only marginally from 116.08x to 115.06x.
- The Discount Rate for Elastic remained effectively unchanged, moving only marginally from 8.13% to 8.11%.
Disclaimer
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