Welcome to Extreme Investor Network, where we provide you with exclusive insights and analysis on the latest investment opportunities in the market. Today, we are diving into Barclays’ recommendation to pick up shares of Atlassian, a top Australian-American software company that has been making waves in the industry.
Analyst Ryan MacWilliams recently upgraded Atlassian to overweight from equal weight, citing the company’s increasing customer activity as a key driver for growth. He raised his price target to $275, implying a 34.3% upside from the current price. Despite a 8.3% increase in the stock this quarter, Atlassian has faced challenges this year, with concerns about moderating organic growth in its cloud business.
However, there are reasons to be optimistic about Atlassian’s future prospects. The company beat second-quarter earnings and revenue estimates, and provided positive guidance for fiscal 2024, particularly in its cloud and data center revenue growth. MacWilliams highlighted the increasing multiyear data center and cloud bookings from customers, as well as higher software developer job posts, which bode well for Atlassian’s margins and growth in the coming years.
In addition, MacWilliams expects around 80% to 90% of Atlassian’s data center customers to migrate to the cloud within the next three years. This shift could lead to free cash flow margin expansion and a healthier growth profile for the company. He also sees potential for revenue growth in 2024 if Atlassian continues to invest in revenue generators or pursues external portfolio additions.
Atlassian’s shares are currently trading at a discount compared to its fast-growth peers with similar margin profiles, presenting an attractive opportunity for investors. MacWilliams believes that Atlassian is well-positioned in the DevOps space, with a strong PLG growth story and attractive unit economics.
Overall, Barclays’ bullish stance on Atlassian highlights the company’s promising outlook and potential for long-term growth. Stay tuned to Extreme Investor Network for more exclusive insights and investment opportunities in the ever-changing market landscape. Happy investing!
