Atlassian (TEAM) Valuation in Focus After Earnings Beat and Renewed Tech Sector Optimism

Atlassian (TEAM) has been at the center of investor attention after its latest earnings report delivered higher-than-expected total and cloud revenue. The company’s topline growth, combined with fresh optimism over potential interest rate cuts sparked by recent Federal Reserve commentary, caused a 3% increase in the share price. With a 90-day delay in higher U.S. tariffs on Chinese goods also removing some pressure on technology stocks, several factors came together this week to push the stock higher and reignite discussion over Atlassian’s growth outlook.

This earnings beat is the latest indication that Atlassian’s cloud strategy continues to pay off, even as broader tech sentiment shifts based on macro headlines. The stock has posted a 7% gain over the past year. However, longer-term performance shows momentum has been uneven, with double-digit declines so far in 2025 and over both the 3- and 5-year periods. Still, with annual revenue growth just under 15% and net income moving in the right direction, investors are taking a closer look at whether the market’s recent rally reflects a change in risk perception or simply a temporary burst of enthusiasm.

After this move and the renewed optimism in tech, the question for investors is whether Atlassian is positioned for more gains or if the market is already pricing in its next phase of growth.

Most Popular Narrative: 16.6% Undervalued

According to the narrative by FrugalBull, Atlassian is currently valued well below its calculated fair value. The analysis points to significant future upside if the company delivers on its growth and profitability assumptions.

“Based on my assumptions, Atlassian’s market capitalization could reach $90 billion, translating to a stock price of $320 (assuming $3 billion in net profit at a 30× earnings multiple). With the current share price in the high $200s, this offers an 18.5% total return over five years, or roughly 3.5% annually. Discounting the projected 2030 price back to 2025 at a 10% annual rate gives a present value of $200 per share, highlighting that the market already factors in significant growth and profitability.”

A surge of enterprise deals, bold profit margin targets, and a healthy dose of tech optimism power this valuation story. Which assumptions put Atlassian’s fair value far above its latest trading levels? Discover the full growth and profitability equations driving this bullish outlook and see what it would take for shares to break out meaningfully.

Result: Fair Value of $204.74 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensified competition from rivals and unexpected slowdowns in enterprise adoption could undermine Atlassian’s projected growth and challenge this bullish outlook.

Find out about the key risks to this Atlassian narrative.

Another View: A Multiples-Based Perspective

Taking a step back from the first valuation, some analysts turn to sales-based valuation methods for a reality check. By this measure, Atlassian appears expensive compared to the broader industry, raising questions about how much future growth is already reflected in the current stock price. Is the market expecting too much too soon, or does Atlassian have the potential to surpass these peer comparisons?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Atlassian for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Atlassian Narrative

If you see things differently or want to dig into Atlassian’s numbers yourself, you can piece together your own view in just a few minutes, or do it your way.

A great starting point for your Atlassian research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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