Bank Of America Sees Buying Opportunity In Atlassian

Atlassian Corporation PLC 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.

The Analyst

BofA’s Nikolay Beliov upgraded Atlassian from Neutral to Buy, keeping the price target at $135.

The Thesis

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.

See Also: Atlassian Analyst Confident In Software Company's Growth After Q1 Print

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.

Price Action

Shares of Atlassian rose 3% to $117.82 at time of publishing on Monday.