Why Elastic Stock Is Climbing Sharply

Elastic rose after the search and data-analytics company announced a new share repurchase plan and raised its 2026 outlook. (Michael Nagle/Bloomberg)

Key Points

• Elastic announce a share repurchase plan of up to $500 million.
• The company sets a medium-term financial goal of 20% annual revenue growth and a 20% adjusted free-cash flow margin.
• Elastic raises its fiscal 2026 revenue forecast to between $1.697 billion and $1.703 billion.

Shares of Elastic rose sharply Friday after the search and data-analytics company announced a share repurchase plan and unveiled ambitious financial targets at its yearly analyst day.

The Elastic board authorized up to $500 million in buybacks with no expiration date, citing its confidence in the company’s business and balance sheet. The company aims to complete at least half of the authorized repurchases in fiscal 2026.

Elastic also unveiled a medium-term financial framework to reach 20% annual revenue growth plus a 20% adjusted free-cash flow margin—hitting the so-called Rule of 40.

In the immediate future, management lifted its fiscal 2026 revenue forecast to between $1.697 billion and $1.703 billion, up a tick from a previous range of $1.679 billion to $1.689 billion. Second-quarter revenue is expected to total $417 million to $419 million, $2 million higher at the midpoint than the company’s past estimate.

Elastic stock was up 12% to $91.70 in premarket trading Friday. Shares closed Thursday down 18% for the year despite Elastic posting a series of earnings beats.

Wall Street seemed to come away from analyst day optimistic about Elastic’s outlook.

“The medium-term financial framework provided by Elastic is bullish and driven by [artificial intelligence],” wrote Cantor Fitzgerald analyst Thomas Blakey in a research note. The firm reiterated a Neutral rating on Elastic shares and lifted its price target to $94 from $92.

Elastic’s Rule of 40 target over the next two to three years was above consensus expectations, Guggenheim Securities said in a research note. The firm noted that Elastic’s base of AI customers is expanding at an outsized rate, which should help the company reach its goal.

Guggenheim reiterated a Buy rating and a $122 price target on the stock.

Write to Nate Wolf at nate.wolf@barrons.com