S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
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S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Sports analytics may be outnumbered when it comes to artificial intelligence
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
Critical asset just had biggest fall on record (Ad)
South Korean doctors hold massive anti-government rally over medical school recruitment plan
What to watch for as China's major political meeting of the year gets underway
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Sports analytics may be outnumbered when it comes to artificial intelligence
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
Critical asset just had biggest fall on record (Ad)
South Korean doctors hold massive anti-government rally over medical school recruitment plan
What to watch for as China's major political meeting of the year gets underway
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Sports analytics may be outnumbered when it comes to artificial intelligence
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Critical asset just had biggest fall on record (Ad)
Norway's hospitalized king gets a pacemaker in Malaysia after falling ill during vacation
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
Critical asset just had biggest fall on record (Ad)
South Korean doctors hold massive anti-government rally over medical school recruitment plan
What to watch for as China's major political meeting of the year gets underway

Elastic stock: A resilient stretch with 44.11% surge

Elastic N.V. stock price

Key Points

  • A better-than-expected November 30 earnings report propelled Elastic's stock by over 37%.
  • Wall Street's consensus view rose to $1.13 per share  after the report. 
  • Elastic's CEO cited AI as key for rapid, low-cost generative applications.
  • 5 stocks we like better than Elastic

While large-cap database stocks Oracle Corp. NYSE: ORCL and MongoDB Inc. NASDAQ: MDB are pulling back in December after November gains, mid-cap Elastic N.V. NYSE: ESTC is up 44.11% in the last month of the year.

The company credits AI as the driver for recent gains. 

The company’s November 30 earnings report sent the stock soaring more than 37% higher. You can see the stock’s gap higher on MarketBeat’s Elastic chart

Elastic is in the ranks of a fairly young tech company potentially poised to show big gains in the coming years. It went public in 2018, and has had a volatile ride, sliding downhill in 2022 along with other technology stocks.

Beat earnings by wide margin

Elastic earnings data show the company topping analysts’ views by a wide margin with net income of 37 cents a share, versus expectations of 24 cents. Revenue of $311 million was well ahead of expectations for $304 million. 

That marked a 16% increase in revenue over the year-earlier quarter, with earnings up from a penny per share. 

In the current quarter, the company said it expects total revenue between $319 million and $321 million, representing 17% year-over-year growth at the midpoint. Analysts were expecting $319 million. 

It expects earnings per share between $0.30 and $0.32. 

Elastic anticipates per-share earnings in a range between $1.06 and $1.15 for the fiscal year, which ends in April. That’s higher than the company’s earlier forecast of $1.01 to $1.11 per share, and above analysts’ consensus view of  $1.08 a share. 


Analysts boost price target 

Since the earnings report, Wall Street’s consensus view has risen to $1.13 per share.

Elastic analyst forecasts show seven analysts boosting their price targets or upgrading their ratings on the stock since the earnings report. 

The consensus view is “moderate buy” with a price target of $90.78. That’s a downside of 21.61%, but it’s not unusual for a stock, particularly one that’s relatively new, to show price action that’s significantly ahead of analysts’ views.

In addition, the stock will pull back at some point after the initial rally has worn itself out. Investors eyeing the analyst enthusiasm and company forecasts may be well served by waiting for a pullback with moving average support. Stocks frequently take a breather before resuming their rally. 

The catalyst for the big uptick was AI.

Deals with major cloud providers

Elastic is a data analytics company built on the power of search. Its platform allows customers to unearth insights using AI and machine learning to sift through large amounts of data. 

Its platform is available as a hosted, managed service across major cloud providers including Amazon Inc.’s NASDAQ: AMZN Web Services, Alphabet Inc.’s NASDAQ: GOOGL Google Cloud Platform and Microsoft Corp.’s NASDAQ: MSFT Azure. 

“Our thoughtful investments and innovation in AI has continued to drive customer excitement and engagement with Elastic, and this was visible in our business in Q2,” said Elastic CEO Ash Kulkarni.

He added that generative AI is driving a resurgence of interest in search which is benefiting the company, as enterprise users have specific requirements. 

The company’s generative AI-driven Elasticsearch Relevance Engine, rolled out in May, resulted in customers upgrading their subscription tiers. 

Subscriber and cloud revenue growing

In the most recent quarter, Elastic’s tally of subscribers rose 5% year-over-year. 

Revenue from Elastic Cloud grew 30%. Elastic Cloud is a fully managed service that provides analytics and search capabilities in real-time. 

Analysts and investors are rethinking their assessment of AI-related stocks. After a rush of enthusiasm in the first 7 months of 2023 that saw the Technology Select Sector SPDR Fund NYSEARCA: XLK advance 44%, investors began rewarding companies for actual AI revenue rather than vague talk of potential.

AI as significant sales driver

“While it will take some time for generative AI spend to become a significant driver of our revenue, we are very excited about the long-term opportunity,” Kulkarni said. 

When search powers AI, he added customers are able to quickly build generative AI applications while reducing a type of mistake called “hallucinations” at a low cost. 

“Elastic's prospects as a key component of the modern IT stack for generative AI remain extremely strong,” Kulkarni said. 

→ Critical asset just had biggest fall on record (From Stansberry Research) (Ad)

Should you invest $1,000 in Elastic right now?

Before you consider Elastic, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Elastic wasn't on the list.

While Elastic currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Elastic (ESTC)
2.493 of 5 stars
$117.01-12.6%N/A254.37Moderate Buy$105.05
Alphabet (GOOGL)
3.4257 of 5 stars
$137.14-1.0%N/A23.64Moderate Buy$153.65
Amazon.com (AMZN)
4.8929 of 5 stars
$178.22+0.8%N/A61.46Buy$197.95
Microsoft (MSFT)
4.8718 of 5 stars
$415.50+0.4%0.72%37.57Moderate Buy$411.06
Oracle (ORCL)
4.9542 of 5 stars
$113.78+1.9%1.41%31.43Moderate Buy$127.00
Technology Select Sector SPDR Fund (XLK)N/A$210.76+1.8%0.61%20.04HoldN/A
MongoDB (MDB)
3.569 of 5 stars
$436.84-2.4%N/A-165.47Moderate Buy$435.68
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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