Atlassian Corporation (TEAM) PT Raised to $225 at Canaccord Genuity

Canaccord Genuity analyst David Hynes Jr. raised the price target on Atlassian Corporation (NASDAQ: TEAM) to $225.00 (from $200.00) while maintaining a Buy rating.

The analyst commented: "Generally speaking, we’d say that conversations with investors since our meetings have been pretty upbeat – the scope of the opportunity, the commitment to margin reexpansion, and the “new” guidance philosophy all stand out. With respect to the latter, FQ1 will be a good test with respect to just how conservatively recast Cloud growth estimates are for F2025. Stress testing our model, we think there could be a couple of points of upside to Atlassian’s FQ1 guide for 27% Cloud growth, which we think could serve as an important first step in unlocking a gradual re-rating of TEAM shares higher. TEAM shares today trade at about 26x EV/FCF on C2025E, and for a business that’s likely to get back to Rule of 50+ metrics in a couple of years, we’d suggest this is a stock that should trade at at least a low-30x forward cash flow multiple over time. The challenge in software at the moment – at least in our coverage – is that we have a group of stocks that are expensive, but for good reason (firms like NOW, MNDY, HUBS, SHOP, KVYO, etc.), and then a group of stocks that are cheap, but where there are still more questions than answers (names like CRM, BRZE, FRSH, FIVN, SPT, etc.). The fact is that there’s not much in between – i.e., quality franchises trading at reasonable valuations – which, in our view, makes Atlassian all the more compelling. Bottom line, we came out of our meetings feeling pretty good about the path that Atlassian is on, we think FQ1 has the potential to be a moderate catalyst for the stock, at least in terms of increasing conviction in the Cloud guidance for this year, and that as investor confidence is restored, there’s a path to a higher multiple here. As such, we’re reiterating our BUY rating and increasing our price target to $225."

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