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Investing.com -- Morgan Stanley analysts reiterated Atlassian (NASDAQ:TEAM) Corporation as their top pick for 2025, citing strong growth prospects and the potential for upward revisions.
The bank raised its price target for the stock to $315 from $259, reflecting a more optimistic outlook.
The analysts highlight that Atlassian is "well positioned to accelerate revenue growth and expand margins in FY26 given a broader portfolio," which suggests significant upside potential.
The company’s current valuation aligns with its peers, but Morgan Stanley (NYSE:MS) sees "strong potential for upside revisions."
Key growth drivers for Atlassian include "an expanding opportunity across three large markets," a broadening solution portfolio, and continued migration from Data Center to Cloud.
The company’s focus on operational efficiency and pricing power is also said to contribute to its favorable outlook.
The bank states, "Our positive thesis on Atlassian is based on a forecast for sustained 20% top-line growth, bolstered by margin expansion."
The recently launched Rovo product is another highlight. Powered by Atlassian Intelligence, Rovo is seen as a significant opportunity, potentially contributing "$400-$600 million of Cloud ARR by CY27."
The analysts note, "Rovo unlocks growth optionality," but caution that it remains early in the product cycle, and pricing models may evolve.
Despite a ~35% stock move over the past four months, Morgan Stanley maintains a conservative approach in their estimates, with the $315 price target reflecting a 44x EV/CY26 FCF multiple, consistent with large-cap software peers.
They conclude that Atlassian's strategic positioning and growth potential justify its top pick status for the coming year.