Elastic’s Strong Financial Performance and Strategic Positioning Justify Buy Rating Amid Cloud Segment Challenges

Robert W. Baird analyst Shrenik Kothari has maintained their bullish stance on ESTC stock, giving a Buy rating on May 28.

Shrenik Kothari has given his Buy rating due to a combination of factors including Elastic’s solid financial performance and strategic positioning. The company exceeded expectations in several key areas such as revenue, billings, and operating margin, despite facing some pressure in its cloud segment due to U.S. Federal softness. The guidance for FY26 reflects a cautious approach, incorporating macroeconomic and federal considerations, yet the company continues to show strong platform traction and improved sales segmentation.
Elastic’s management has emphasized the importance of GenAI and consolidation as primary business drivers, with a focus on generating significant sales opportunities through competitive displacements in security and observability. The company’s sales strategy adjustments have started to yield positive results, particularly in enterprise and commercial accounts, and they are expanding their sales capacity to capture future growth opportunities. Additionally, the substantial growth in cloud revenue and the adoption of AI technologies further support the positive outlook, making the stock an attractive buy at its current valuation.

According to TipRanks, Kothari is a top 100 analyst with an average return of 28.1% and a 76.89% success rate. Kothari covers the Technology sector, focusing on stocks such as CyberArk Software, Tenable Holdings, and Check Point.

In another report released on May 28, Rosenblatt Securities also maintained a Buy rating on the stock with a $140.00 price target.