Market Overview

Atlassian A Buy At Summit Redstone On Highly Differentiated Software Model

Share:
Atlassian A Buy At Summit Redstone On Highly Differentiated Software Model

Summit Redstone Partners has started coverage of Atlassian Corporation PLC (NASDAQ: TEAM) with a Buy rating and $35 price target on differentiated software and online sales model.

Atlassian is an enterprise software company. The company's products include JIRA for team planning and project management, Confluence for team content creation and sharing, and HipChat for team messaging and communications.

"We believe this company continues to invest in its competitive advantages as it grows share especially from larger competitors who are not as focused," analyst Jonathan Kees wrote in a note.

The analyst noted that Atlassian is gaining share from larger peers like International Business Machines Corp. (NYSE: IBM), Microsoft Corporation (NASDAQ: MSFT) and HP Inc (NYSE: HPQ) as they are not as focused as Atlassian on team collaboration solutions and communications.

Related Link: BTIG Research Downgraded Atlassian To Neutral On Valuation

"While overall revenue outlook is for GDP growth at best for IBM, we know from our sources that IBM Rational has been declining double digits for the last several years. While not declining as much, Microsoft's TFS's growth has been anemic at best and expectations are for continued tepid revenue performance," Kees highlighted.

Moreover, Kees finds Atlassian's FY 2017 revenue guidance of 30 percent growth year-over-year at the midpoint, or $597 million, more acceptable when compared to smaller and younger companies like Zendesk of 48 percent growth for 2016 and CA (Rally) of expectations for double-digit revenue contribution.

Kees said the Atlassian's goal of reaching 20 percent margins within the next five years as achievable given top-line growth.

The analyst, who noted that the company's competitive advantages remain viable for the immediate future, expects FY17 EPS of $0.32 on revenue of $597.6 million.

In addition, the $35 price target is based on 8.9x EV to FY2018 revenues of $769 million, and represents a potential upside of 15 percent from Monday's close of $30.33.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for TEAM

DateFirmActionFromTo
Jan 2021KeyBancMaintainsOverweight
Nov 2020KeyBancMaintainsOverweight
Oct 2020Truist SecuritiesDowngradesBuyHold

View More Analyst Ratings for TEAM
View the Latest Analyst Ratings

 

Related Articles (TEAM)

View Comments and Join the Discussion!

Posted-In: Confluence HipChatAnalyst Color Long Ideas Price Target Initiation Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
WWEEvercore ISI GroupUpgrades
INTB of A SecuritiesUpgrades40.0
BLDPBMO CapitalInitiates Coverage On39.0
SSYSStifelInitiates Coverage On40.0
CMGGoldman SachsInitiates Coverage On1,650.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com