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Investing.com - Guggenheim has reiterated its Buy rating and $225.00 price target on Atlassian Corporation (NASDAQ:TEAM) following the company’s fiscal first-quarter 2026 results. The target represents significant upside potential from the current price of $160.67, with InvestingPro data showing the stock has declined 29.63% over the past six months.
Atlassian reported Cloud growth of 26% in the quarter, exceeding investor expectations of over 24%, according to Guggenheim’s TMT survey. The growth was primarily driven by paid seat expansions, Data Center migrations, and cross-selling initiatives, with Cloud New ARR growth excluding migrations calculated at approximately 35% year-over-year. This performance aligns with the company’s overall revenue growth of 19.66% over the last twelve months, supported by impressive gross profit margins of 82.84% according to InvestingPro data.
The company has raised its fiscal year 2026 Cloud guidance by 150 basis points to 22.5%, reflecting increased Cloud migrations expected for the remainder of the year and the first-quarter organic performance. Atlassian also increased its total revenue guidance by 180 basis points to 20.8% and non-GAAP EBIT margin guidance by 150 basis points to 25.5%. InvestingPro analysis reveals that analysts expect the company to be profitable this year, with EPS forecasts for FY2026 at $4.31, despite not being profitable over the last twelve months.
Guggenheim noted that the quarter represented "another step in the right direction to disproving the AI risk bear case," highlighting management’s observation that Atlassian customers using AI code generation tools expand their paid Jira seats at approximately 5% higher rates than non-users. The firm also mentioned the Teamwork Collection bundle’s growing momentum and the potential for expansion from new Service and Software Collections.
Atlassian has maintained its long-term outlook of over 20% total revenue CAGR and more than 25% non-GAAP EBIT margin by fiscal year 2027, with free cash flow margin approximately 500 basis points higher. Guggenheim continues to model 26% Cloud growth for fiscal year 2026 with total revenue growth of 23% and nearly 30% free cash flow margin. With a market capitalization of $42.29 billion and analyst consensus recommendation of 1.59 (where 1 is Strong Buy), Atlassian remains a closely watched stock. For deeper insights into TEAM’s valuation and 10+ additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Atlassian Corp Plc reported its first-quarter earnings for fiscal year 2026, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $1.04, outperforming the forecasted $0.84. Atlassian’s revenue also exceeded predictions, reaching $1.43 billion against the anticipated $1.4 billion. These results highlight the company’s strong financial performance in the recent quarter. Despite these positive earnings and revenue figures, the stock saw a decline in after-hours trading. The company’s financial results are closely watched by investors, as they provide insights into its operational efficiency and market position. Analyst firms often use such earnings reports to adjust their ratings or projections for the company.
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