BMO Capital Markets said its confidence in Atlassian sustaining 20% year-over-year earnings growth has increased.
Atlassian Corp. ($TEAM) stock rose in Friday’s premarket session after the San Francisco, California-based collaboration software, services and tool provider’s stock snagged a bullish recommendation.
On Friday, BMO Capital Markets upgraded Atlassian stock to ‘Outperform’ from ‘Market Perform’ and raised the price target to $292 from $255, TheFly reported. The updated price target suggests a potential upside of about 20%.
The firm's analysts said their confidence in the company sustaining 20% year-over-year (YoY) earnings growth has increased. According to the analysts, this is achievable due to a combination of factors after the company tides over a tougher comparison in the March quarter.
BMO sees the shares pushing higher, aided by the current cash flow valuation relative to revenue growth multiple, if Atlassian sustains 20% revenue growth.
Friday's analyst action marked a back-to-back upgrade for Atlassian, as Truist upgraded the stock to ‘Buy’ from ‘Hold’ earlier this week. The firm has a $300 price target for the stock. The company has a favorable model setup for the year as a “unique artificial intelligence (AI)” opportunity, the firm said, adding that the company could see potential margin upside, which hasn’t been factored in by the Street.
On Monday, Oppenheimer raised the price target for Atlassian stock to $300 from $270, and maintained an ‘Outperform’ rating. The firm reiterated the stock as its top pick due to multiple catalysts. Piper Sandler also raised the price target from $265 to $310.
Despite the positive analyst takes, retail sentiment remained subdued. On Stocktwits, sentiment toward the stock is ‘neutral’ (46/50), with message volume dropping off to ‘normal’ levels.
In premarket trading, Atlassian stock rose 1.93% to $249.20 as of 6:36 a.m. ET. The stock gained an underwhelming 2.32% in 2024.
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