Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
On Thursday, TD Cowen maintained a Hold rating on Atlassian Corporation (NASDAQ:TEAM) shares with a consistent price target of $320.00. The software giant, currently valued at $52.9 billion, has demonstrated strong revenue growth of 23.19% over the last twelve months. According to InvestingPro analysis, the company maintains impressive gross profit margins of 81.82%, though current market prices suggest the stock is trading above its Fair Value. The decision comes after TD Cowen's analyst attended TEAM's Team '25 Conference & Analyst Session, held in Anaheim earlier this week. During the event, conversations with partners yielded a cautiously optimistic outlook, noting positive competitive trends, pricing advantages, and growing demand for Loom. However, concerns were raised regarding IT budget restrictions, changes in partner and go-to-market strategies, and the sluggish adoption of AI technology.
At the conference, it was noted that Rovo, Atlassian's AI offering, is now available for free, which may indicate challenges in its initial uptake as a paid product. Despite this, analysts at TD Cowen believe that Atlassian's new bundling strategies could enhance the utilization of Rovo and spur more comprehensive deployments among both business and technical users. This, in turn, could lead to more substantial monetization prospects in the future.
Furthermore, the announcement of Isolated Clouds, set for general availability in 2026, was highlighted as a potential boost for Data Center customers transitioning to cloud services. This move, paired with the already available Government Cloud in early access, could provide a stronger pathway to cloud adoption.
However, the report by TD Cowen emphasizes that the impact of these initiatives on Atlassian's business model might take time to materialize. Current feedback indicates that recent changes in the partner channel, limited IT budgets, and difficulties in migrating from Data Center to Cloud are posing immediate challenges to growth. As a result, TD Cowen advises to maintain a Hold stance on Atlassian's stock. For deeper insights into Atlassian's valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, Atlassian Corporation has seen several adjustments to its stock price targets by major analyst firms. BMO Capital Markets lowered its price target for Atlassian to $295 from $360, while maintaining an Outperform rating, citing a cautious stance due to the macroeconomic environment but acknowledging positive partner feedback and reduced costs for the Rovo product. Similarly, Mizuho (NYSE:MFG) Securities reduced its target to $325 from $355, also retaining an Outperform rating, after attending the Team 2025 user conference where Atlassian introduced new cloud services. Mizuho expressed optimism about Atlassian's growth prospects and cloud migration strategy.
KeyBanc followed suit, cutting its price target to $275 from $365, while keeping an Overweight rating. KeyBanc analysts noted consistent demand and cloud migration activities, despite potential future slowdowns due to tariffs. Meanwhile, UBS made a more significant adjustment, lowering the target to $230 from $330 and maintaining a Neutral rating, driven by reports of stringent budget scrutiny among Atlassian's customers. UBS highlighted the current free cash flow multiple as a factor in its valuation approach.
Additionally, Atlassian was part of a broader market downturn amid trade war fears, with its stock dropping 3.9%. These recent developments reflect a cautious yet varied outlook among analysts regarding Atlassian's performance and potential in the current economic climate.
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