Atlassian stock price target cut to $250 by TD Cowen

On Wednesday, TD Cowen analyst Derrick Wood adjusted the price target on Atlassian (NASDAQ:TEAM) Corporation (NASDAQ: TEAM) shares, reducing it to $250 from the previous $320, while retaining a Hold rating on the stock. Currently trading at $208.13, the stock sits within a 52-week range of $135.29 to $326.00, with analyst targets ranging from $225 to $420. Wood’s commentary highlighted a mix of positive and cautious signals from partner checks, which included stable win rates and pricing tailwinds, alongside concerns about IT budget scrutiny and changes in partner structure.

The analyst noted that while there is confidence in cloud and enterprise growth trends, there may be some irregularities in the near term, particularly in small to medium business (SMB) and Data Center (DC) migration activities. According to InvestingPro data, Atlassian maintains impressive gross profit margins of 81.82% and has achieved revenue growth of 23.19% over the last twelve months. Wood anticipates a modest upside for Atlassian’s third-quarter results and expects little alteration to the fiscal year 2025 guidance.

Atlassian’s shares have seen a significant drop, falling approximately 35% from their peak in February. With a market capitalization of $54.5 billion, the company’s valuation now sits at around 30 times its expected calendar year 2026 free cash flow (EV/CY26E FCF). InvestingPro analysis suggests the stock remains slightly overvalued at current levels. Despite more attractive valuations given the recent decline, Wood expressed caution due to emerging questions about the broader economic environment and the company’s ability to monetize artificial intelligence. For deeper insights into Atlassian’s valuation metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

The analyst pointed to potential debates among investors regarding Atlassian’s growth prospects, especially whether the company can achieve a growth rate of over 20% for the fiscal year 2026. Wood’s own growth outlook for Atlassian remains at 19%, which aligns with the consensus on the Street. InvestingPro data reveals that net income is expected to grow this year, with analysts predicting profitability despite current challenges.

In light of the current pressures on sector valuations, the price target has been adjusted to $250, which corresponds to approximately 38 times the expected EV/CY26E FCF, according to Wood’s analysis. The Hold rating suggests that the analyst sees limited potential for stock price appreciation in the near term.

In other recent news, Atlassian Corporation has made significant updates to its Board of Directors. Enrique Salem, who served as a director for nearly 12 years, has retired, and Karen Dykstra, the former CFO of VMware, has been appointed as his replacement. Dykstra, who also serves on the boards of Gartner (NYSE:IT) Inc. and Arm Holdings (NASDAQ:ARM) Plc, brings extensive financial expertise to Atlassian. In terms of analyst activity, Macquarie upgraded Atlassian’s stock rating to Outperform with a new price target of $270. This upgrade was influenced by Atlassian’s strategic product integration and anticipated revenue outperformance. Meanwhile, Cantor Fitzgerald maintained an Overweight rating with a $272 target, expressing confidence in Atlassian’s growth trajectory following its Team ’25 conference. Stephens also reaffirmed an Equal Weight rating with a $255 target, noting both opportunities and concerns related to Atlassian’s AI integration. These developments reflect a period of strategic adjustments and strong analyst interest in Atlassian’s future prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.