Atlassian Upgrade by Raymond James

Location: Investing.com
Date: Monday
Company: Atlassian (NASDAQ:TEAM)

Raymond James has upgraded Atlassian from Market Perform to Outperform, noting potential upside amid the company’s cloud transition.

Despite a nearly 20% decline in stock price over the past six months and a 60% drop over three years, analysts see opportunities ahead.

Key concerns for investors include:
– Missed cloud growth projections of 50% for FY23 and FY24, reporting only 38% growth in FY23 and guiding for 29% in FY24.
– Downgraded expectations led to stock underperformance.

However, Raymond James is optimistic about FY25 cloud growth, estimating it could exceed guidance due to:
– 120% net revenue retention (NRR)
– Price increases
– Migration tailwinds from data centers

Additionally, developer seat stabilization, a critical metric, remained flat last quarter, indicating potential growth.

Raymond James maintains FY25 revenue and EPS estimates at $5.06 billion and $3.09 respectively and raised the price target to $200, based on an 8.5x EV/Sales multiple on FY26 revenue.

The analysts suggest that Atlassian could achieve over 30% cloud growth in coming years, possibly driving stock prices higher. In a best-case scenario, stocks could reach $300, while a worst-case could see a drop to $125. The firm’s price target is $200 a share.