ESTC
Elastic N.V.
$61.94
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Fair Value
Trading 24.8% below fair value
You pay
$61.94
Bear
$47.52
Fair
$82.38
Bull
$120.22
Bear
$47.52
-23.3%
11% rev growth, 17% terminal margin
Fair
$82.38
+33.0%
18% rev growth, 23% terminal margin
Bull
$120.22
+94.1%
24% rev growth, 26% terminal margin
Key Value Driver
Revenue growth (18%) × margin expansion to 23%
Terminal Value % of EV
56%
Implied Market Multiple
3.3x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $62.88 from 34 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $82.38 per share.
Warnings
Gross margin of 76% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $62.88 (from 34 analysts). Our estimate is 44% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep