Morgan Stanley bullish on Atlassian cloud growth despite share target cut Author: Investing.com

Morgan Stanley on Tuesday revised its outlook for Atlassian (NASDAQ:) Corporation (NASDAQ:TEAM) stock, lowering its price target from $245 to $225 but reaffirming its “Overweight” rating.

The company indicated that the market may not be fully recognizing the growth potential of Atlassian’s cloud solutions. Atlassian, known for its collaboration and productivity software, currently targets three major markets, with a total addressable market (TAM) of more than $67 billion.

Morgan Stanley’s stance suggests confidence in Atlassian’s ability to maintain a solid growth trajectory. The analyst noted that the company’s cloud offering is expected to sustain 20%+ growth and generate 25%+ free cash flow (FCF) growth over the next three years. This forecast underscores the company’s belief in the long-term viability of Atlassian’s business model and its ability to capitalize on market opportunities.

Morgan Stanley’s Overweight rating reflects an optimistic view of Atlassian’s stock relative to the market. This rating means the company expects the stock to outperform the average total return of stocks covered by the analyst over the next 12 to 18 months.

Atlassian’s strategic position in the cloud sector is seen as a key factor in its sustainable growth. The company’s expanded platform aims to address a wide range of customer needs across markets, which could be a significant factor in its continued success.

The revised price target and continued positive rating from Morgan Stanley come as Atlassian continues to navigate the competitive landscape of cloud software solutions. The company’s focus on innovation and market expansion is key to its growth strategy, according to a company analysis.

InvestingPro Insights

As Atlassian Corporation (NASDAQ:TEAM) continues to expand in the competitive cloud software solutions market, real-time data from InvestingPro provides a deeper financial perspective. Atlassian’s market capitalization stands at a solid $46.84 billion, reflecting its significant presence in the industry. The company’s gross profit margin has impressively reached 81.86% in the last twelve months as of Q3 2024, underlining its ability to maintain profitability in its operations. Despite the lack of profitability in the last twelve months, with a P/E ratio of -286.2, analysts are predicting a turnaround, with net income set to increase this year.

InvestingPro’s advice highlights Atlassian’s impressive gross profit margins and predicts the company will be profitable within the year, which is in line with Morgan Stanley’s positive outlook. Additionally, Atlassian operates with a moderate level of debt, which may be a reassuring factor for investors considering the company’s financial health. For those looking for a more comprehensive analysis, InvestingPro offers several additional Atlassian tips, available with a subscription. Interested readers can use the coupon code PRONEWS24 to get up to 10% off an annual Pro subscription and an annual or two-year Pro+ subscription, providing you with valuable information to help you make investment decisions.

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