Atlassian Corporation PLC (NASDAQ: TEAM) doesn't need to “perform heroics” to achieve a $10 billion revenue scale by fiscal 2027-2029, with Jira sustaining 30% growth and the company using tuck-in mergers and acquisitions to augment its portfolio in the large and fragmented DevOps market, according to Bank of America.
BofA’s Nikolay Beliov upgraded Atlassian from Neutral to Buy, keeping the price target at $135.
Recent pressure on high-growth software stocks represents a buying opportunity for Atlassian’s shares, Beliov said.
The analyst mentioned a few reasons for recommending the company’s stock. Against a macro slowdown, Atlassian’s model will work better than traditional models, given that the company has “a low-cost/pricing-power, high-quality, low-friction, diversified business model,” Beliov wrote.
He added that Atlassian has a best-in-class durable business model, which is appealing in a low interest environment.
The analyst noted Jira is in its initial stages and the market potential is large. He added that although there’s been a slight delay in transitioning the Server install base to subscription, eventually the company could generate more than $500 million in maintenance revenues from this.
Shares of Atlassian rose 3% to $117.82 at time of publishing on Monday.
Latest Ratings for TEAM
|Oct 2019||Initiates Coverage On||Buy|
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