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Elastic (NYSE:ESTC) shares surged more than 18% in premarket trading on Friday after the Dutch-American tech company reported stronger-than-expected second-quarter results and guidance, resulting in Wells Fargo upgrading the stock.
Analyst Andrew Nowinski raised his rating on Elastic (ESTC) to overweight and boosted his price target to $115, noting that generative artificial intelligence and log analytics and security information and event management are likely to drive a "revenue re-acceleration."
Nowinski also put a 5.8 multiple on the stock, adding that it is justified due to "higher long-term growth assumptions."
Looking to the third-quarter, Elastic (ESTC) expects revenue to fall within a range of $319M to $321M, above the estimate of $318.58M. Adjusted earnings are forecast to be between 30 and 32 cents per share, above the estimate of 28 cents per share.
For the full-year, total revenue is expected to be between $1.247B and $1.253B compared to the estimate of $1.25B. Non-GAAP earnings is expected to be between $1.06 and $1.15 per share versus the expectation of $1.09 per share.
During the second-quarter, Elastic (ESTC) earned an adjusted 37 cents per share on $311M in revenue. Elastic Cloud revenue was $135 million, an increase of 31% year-over-year, and its non-GAAP operating margin was 13%.
Total subscription customer count was 20,700 compared to 20,500 in the first quarter. Total customer count with Annual Contract Value greater than $100,000 was over 1,220 compared to over 1,190 in the first quarter.
Analysts are largely bullish on Elastic (ESTC). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ESTC a HOLD.