Why Elastic Stock Bounced 6% Higher on Friday
Key Points
The search engine specialist held its investor day.
It used the opportunity to raise its guidance for the current fiscal year.
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Elastic (NYSE: ESTC), which bills itself as "the Search AI company" to emphasize its devotion to artificial intelligence (AI) technology, had quite the springy session on the stock exchange Friday. Investors were reacting to several developments immediately before and during its annual investor day, plus a clutch of bullish analyst updates.
With those tailwinds, Elastic's shares closed the day more than 6% higher. By contrast, the S&P 500 index landed in the red with a 2.7% fall.
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Guidance raised, share buybacks launched
The most impactful of these news items was Elastic's raising of full-year guidance. For the entirety of its current fiscal 2026, it's expecting around $1.7 billion in revenue, a slight improvement from its previous forecast range. The company's non-GAAP (adjusted) operating margin guidance also received a boost; this is now 16.25% from the preceding 16%.
Image source: Getty Images.
Previous to that, on Thursday after market close, Elastic announced the launch of a new share-repurchase program. The company's board of directors has authorized up to $500 million of its ordinary shares in an initiative that does not have an expiration date.
In its press release, Elastic quoted CFO Navam Welihinda as saying that "Through our disciplined capital allocation approach and strong balance sheet, we are well-positioned to continue investing in our business while delivering value to our shareholders."
The bulls have their say
Compounding these developments, several analysts weighed in with updates on Elastic stock. They were generally bullish, such as the note authored by Stifel's Brad Reback.
According to reports, in reiterating his buy recommendation and $134 per-share price target on the shares, the analyst felt that the company's core offerings stand in front of substantial growth opportunities. He also feels that it should do well given the significant take-up of generative AI by enterprise clients these days.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Elastic. The Motley Fool has a disclosure policy.
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