KeyBanc has adjusted its price target for Atlassian (TEAM, Financial), reducing it from $275 to $250 while maintaining an Overweight rating. The firm holds an optimistic view on Atlassian’s upcoming fourth quarter earnings, noting the possibility of surpassing both its estimates and those of the Street. This optimism is based on findings from its second-quarter VAR survey, which indicated a steady to improving macroeconomic environment.
Despite this positive outlook, KeyBanc has revised its revenue projections for fiscal year 2026 downward to align with Atlassian's more cautious guidance strategy. Currently, Atlassian’s shares are trading at 28 times their FY26 free cash flow, significantly below their three-year average multiple. This suggests, according to KeyBanc, that the market has already accounted for the company’s lowered growth forecasts. Consequently, the upcoming Q4 earnings call might serve as a significant moment for re-evaluation.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 27 analysts, the average target price for Atlassian Corp (TEAM, Financial) is $276.03 with a high estimate of $420.00 and a low estimate of $211.00. The average target implies an upside of 44.94% from the current price of $190.45. More detailed estimate data can be found on the Atlassian Corp (TEAM) Forecast page.
Based on the consensus recommendation from 30 brokerage firms, Atlassian Corp's (TEAM, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Atlassian Corp (TEAM, Financial) in one year is $319.36, suggesting a upside of 67.69% from the current price of $190.45. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Atlassian Corp (TEAM) Summary page.
TEAM Key Business Developments
Release Date: May 01, 2025
- Total Revenue: $1.4 billion in Q3.
- Cloud Revenue Growth: 25% year-over-year.
- Free Cash Flow Margin: 47% for the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atlassian Corp (TEAM, Financial) reported total revenue of $1.4 billion in Q3, driven by a 25% year-over-year growth in cloud revenue.
- The company achieved a free cash flow margin of 47% for the quarter, indicating strong financial health.
- Atlassian Corp (TEAM) has over 1.5 million monthly active users of AI across its platform, showcasing significant adoption of its AI capabilities.
- The company achieved FedRAMP moderate authorization for its US federal government customers, expanding its cloud platform with the Atlassian Government Cloud.
- Atlassian Corp (TEAM) continues to make progress in its strategic priorities, including advancements in AI and connecting technology and business teams through its platform.
Negative Points
- Enterprise deals landed later than expected in the quarter, impacting Q3 cloud revenue growth.
- The company is experiencing elongated deal cycles due to larger, more complex deals, which could affect future revenue timing.
- There is investor confusion regarding the impact of data center duration changes on revenue growth.
- The transition to a new Chief Revenue Officer (CRO) could potentially impact the go-to-market strategy and execution.
- The company faces challenges in balancing growth and capital usage, particularly with the integration of AI capabilities like Rovo.
