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Investing.com - Raymond (NSE:RYMD) James has lowered its price target on Atlassian Corporation (NASDAQ:TEAM) to $250 from $300 while maintaining an Outperform rating following the company’s fourth-quarter fiscal results. The software company, currently trading at $171 with a market cap of $44.9 billion, is trading below its InvestingPro Fair Value, suggesting potential upside opportunity.
The software company delivered upside to most key metrics in its June quarter, with an accelerating beat in its Cloud business, which Raymond James identifies as a key driver for the stock. The company maintains impressive gross profit margins of 82.3%, according to InvestingPro data, while achieving 19.1% year-over-year revenue growth. Atlassian also provided initial fiscal year 2026 guidance that aligned with investor expectations.
Raymond James noted improved execution under Chief Revenue Officer Brian Duffy in his second quarter, describing it as "very encouraging" compared to the "relatively disappointing" third-quarter performance that had been affected by late deal closures.
The firm believes Atlassian’s cloud value proposition has "recently tripled," which should lead to better migration activity over the coming year. Raymond James suggests cloud growth could reach mid-20% versus the company’s guidance of 21%, while total revenue might approach 20% against the 18% guidance.
Raymond James indicated that Atlassian’s conservative mid-single digit migration assumption likely understates potential growth, and expects valuation multiple expansion as stronger performance unfolds, potentially pushing the stock "well into the $200s and beyond." This aligns with broader analyst sentiment, as InvestingPro data shows analyst targets ranging from $196 to $480, with 8 additional exclusive ProTips available for subscribers looking to dive deeper into Atlassian’s growth potential.
In other recent news, Atlassian Corporation reported strong financial results with cloud revenue growth of 26%, surpassing its guidance of 23%. Total (EPA:TTEF) revenue increased by 22%, exceeding consensus estimates by 2%, and the operating margin also outperformed consensus by 230 basis points. Despite these positive financial results, Capital One (NYSE:COF) downgraded Atlassian from Overweight to Equal-weight, citing concerns over AI competition and valuation challenges. The firm also reduced its price target to $211 from $241. In contrast, Bernstein SocGen Group maintained an Outperform rating with a $310 price target, noting ongoing investor debate about the company’s valuation. Additionally, Moody’s Ratings upgraded Atlassian’s senior unsecured notes to Baa2, reflecting expectations of rapid improvements in its credit profile and strong business execution. Moody’s anticipates Atlassian’s revenues to grow by 20% or more over the next 12 to 24 months, driven by increased cloud subscription revenues. Goldman Sachs also adjusted its price target for Atlassian to $260 from $305, while maintaining a Buy rating, following the company’s recent earnings report.
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