Goldman Sachs Reiterates Buy Rating on Atlassian Corporation (TEAM)

Goldman Sachs analyst Kash Rangan reiterated a Buy rating and $260.00 price target on Atlassian Corporation (NASDAQ: TEAM).

The analyst comments "TEAM was indicated +5% AH (initially +12%), as the beat-and-raise from F1Q26 appeared modest once adjusted for the mechanical tailwinds from the Data Center End-of-Life transition (+1% on Revenue / +100bps on OpM and -50bps to F26 Revenue growth guide / -50bps to F26 OpM guide). Given the DC EOL evolution's longer time-frame (2-2.5 years), questions around the business’s organic growth (ex. price increase and DC EOL benefits) are fair. Still, focusing solely on near-term transition noise through F26 would be missing the forest for the trees. The strategic prize - though a multi-step process - is instead the strategic pivot from DC to Cloud which should provide a long runway for growth. We reiterate our Buy rating and $260 PT, while noting the underappreciated positives: 1) Sunsetting DC enables Atlassian to concentrate product development, maintenance, and sales efforts on one modality – Cloud – which we view as strategically sound even if the path forward is multi-phased, 2) Benefit from DC EOL may prove to be greater-than-expected which can drive further upside to DC near-term. That said, the overall business's long-term growth trajectory remains intact, which will be underpinned by Cloud in F27 and beyond. As Atlassian ceases DC sales to new customers in F26, we see potential for Cloud growth to accelerate in F27 and further strengthen through F28/F29 as the transition completes, with Cloud becoming the primary growth anchor for the company, 3) AI innovations, refined packaging and bundling (e.g., Teamwork Collection), and recent acquisitions of DX (pending close) and the Browser Company (closed) should empower Atlassian to create a more enduring work graph with compounding value in the age of AI, 4) The eventual migration of the DC installed base to Cloud sets up a multi-stage period of enduring growth as DC surpasses end-of-support post-2029. Amidst the broader business transformation, we also acknowledge the ongoing management transitions: President departure, new CRO, ongoing CFO change, and an incoming CPO. Even with the AH stock reaction, investors need confidence that AI will not encroach development and customer support seats, which can be supported by company expectation for technical users (~50% of user base) to grow >22%. If investors can believe that AI will not disintermediate developer jobs, the stock should garner a meaningfully higher multiple than current 6x EV / C26 Sales and 23x EV/ C26 FCF."

For an analyst ratings summary and ratings history on Atlassian Corporation click here. For more ratings news on Atlassian Corporation click here.

Shares of Atlassian Corporation closed at $160.67 yesterday.

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