Canaccord Trims Elastic (ESTC) Price Target, Maintains Buy
A group of software engineers working in an open, futuristic office.
Notably, Canaccord pointed out that while total revenue exceeded estimates, the composition of that beat leaned more heavily on Elastic's self-managed offerings than on its cloud-native platform, Elastic Cloud. Cloud growth, a key long-term focus for the company, came in slightly below expectations, suggesting some variability in adoption pace or customer expansion.
Still, the firm emphasized that Elastic's guidance for the coming quarters appears 'amply conservative,' leaving room for the company to outperform its own targets. With cost management measures in place and increasing enterprise interest in search-powered AI tools, Canaccord believes Elastic is positioned to exceed expectations over the course of the year.
Shares of Elastic have rebounded in recent months as investor confidence has strengthened around the company's ability to execute a balanced growth strategy. The lowered target reflects a more cautious near-term stance but doesn't change the firm's broader view that Elastic remains an attractive play in the search and observability space.
While we acknowledge the potential of ESTC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: Top 10 Healthcare AI Stocks to Buy According to Hedge Funds and 10 Best Industrial Automation Stocks to Buy for the Next Decade
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