Elastic (ESTC) Soars 11.5%: Is Further Upside Left in the Stock?

Elastic ESTC shares rallied 11.5% in the last trading session to close at $86.03. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 24% gain over the past four weeks.

The optimism surrounding the stock can be attributed to strong demand for Elastic’s search and observability solutions, supported by growing adoption of its Elasticsearch platform and AI-powered capabilities. The company is benefiting from rising demand for AI-driven search, real-time data analytics and cloud-based workloads, which are supporting its revenue growth and strengthening investor confidence in the company’s outlook.

This software developer is expected to post quarterly earnings of $0.59 per share in its upcoming report, which represents a year-over-year change of -1.7%. Revenues are expected to be $469.49 million, up 13.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Elastic, the consensus EPS estimate for the quarter has been revised 13.7% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on ESTC going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Elastic is part of the Zacks Internet - Software industry. GitLab Inc. GTLB, another stock in the same industry, closed the last trading session 6.2% higher at $43.35. GTLB has returned 24.3% in the past month.

Gitlab's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.18. Compared to the company's year-ago EPS, this represents a change of -25%. Gitlab currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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