TEAM: Cloud Transition Progress And AWS Partnership Will Drive Long-Term Upside

Analysts have reduced their price target on Atlassian from $196.00 to $178.00, citing slightly higher perceived risk, a moderation in expected revenue growth, and a modestly lower long term profit margin outlook.

Analyst Commentary

Bearish analysts have framed the reduced price target as a recalibration of expectations rather than a shift in the long term thesis. However, they emphasize that the risk reward profile is now less favorable at current levels.

They point to a combination of macro uncertainty and competitive intensity in the software collaboration market as factors that could weigh on Atlassian's ability to sustain prior growth trajectories.

Bearish Takeaways

• Bearish analysts argue that the new price target better reflects execution risk in Atlassian's cloud transition and monetization roadmap, suggesting less room for multiple expansion.
• There is heightened concern that revenue growth could trend closer to the low end of prior expectations, which would pressure valuation metrics that already screen rich versus peers.
• Some see downside risk to long term margin assumptions, warning that elevated investment needs in product development and go to market could delay operating leverage.
• Bearish commentary also highlights the possibility of slower enterprise seat expansion, which could expose the stock to further estimate cuts if macro conditions deteriorate.

What's in the News

• Atlassian cloud apps, including Jira, Confluence, and Jira Service Management, are now publicly listed on AWS Marketplace. This expands reach to customers in more than 150 countries and over 15 currencies and deepens the company’s multi year strategic collaboration with AWS (Key Developments).
• The AWS partnership includes twelve new joint integrations, large scale migrations of Jira and Confluence instances to AWS Graviton for better performance, and a Cloud Center of Excellence to accelerate complex enterprise cloud and AI migrations (Key Developments).
• Atlassian has announced earnings guidance calling for second quarter 2025 revenue of $1,535 million to $1,543 million and projecting approximately 20.8% year over year total revenue growth for fiscal 2026 (Key Developments).
• The Board has authorized a share repurchase program of up to $2.5 billion of Class A common stock, with no fixed expiration date. This signals confidence in the company’s long term value creation (Key Developments).
• Under the existing buyback announced on October 31, 2024, Atlassian has repurchased 2,961,484 shares for $578.73 million, representing 1.13% of shares, including 1,383,000 shares repurchased in the latest reported tranche (Key Developments).

Valuation Changes

• Consensus Analyst Price Target has fallen modestly from $196.00 to $178.00, reflecting a more conservative fair value estimate.
• Discount Rate has risen slightly from 7.98% to 8.04%, implying a marginally higher required return for Atlassian’s equity.
• Revenue Growth expectations have edged down from 18.09% to 17.01%, signaling a somewhat slower projected growth trajectory.
• Net Profit Margin assumptions have decreased from 2.47% to 2.20%, indicating slightly lower anticipated long term profitability.
• Future P/E has ticked down marginally from 311.84x to 310.35x, suggesting a small compression in the implied valuation multiple.