Atlassian stock forecast: Can cloud growth lift lagging TEAM shares?
Atlassian (TEAM) has reported better-than-expected fourth quarter and fiscal year results. However, the TEAM stock price has continued to fall, losing around 25% since August highs, as of 4 October.
Caught in the midst of several hacking attacks and suffering from macro-economic factors that have severely affected other major growth stocks, will the software firm regain momentum? Here we take a look at what factors are shaping the Atlassian stock forecast.
What is Atlassian?
Atlassian is a software company that focuses on developing collaboration and productivity tools.
Headquartered in Sydney, Australia, the company was established in 2002 by friends Mike Cannon-Brookes and Scott Farquhar. Atlassian is now a global company with more than 8,000 employees and 240,000 customers, as of October 2022, many of which are major companies,including Airbnb (ABNB), Toyota (TM) and eBay (EBAY).
In 2009, the tech firm expanded into Europe by opening its first office in Amsterdam. In 2013, Atlassian further expanded into Asia by opening offices in Japan and the Philippines.
The company’s most famous products include:
Jira Software: a work management tool for all sorts of use cases, like test case management to software development.
Jira Service Management: part of Jira Software, this is a service desk product that helps teams organise service requests, incidents and problems.
Confluence: a remote-friendly team workspace where members can build, organise and collaborate on projects virtually.
Trello: an online teamwork management platform.
Atlassian went public in 2015 via an initial public offering (IPO), listing on the Nasdaq stock exchange at $21 a share under the ticker TEAM.
TEAM stock price history
Since going public in 2015, Atlassian has been on a bullish run, surging by more than 1,500% from $27.83 on 10 December on 2015 to $458.35 at market close on 29 October 2021, when the stock reached its all-time high.
Over the last five years, TEAM has achieved trailing returns of 43.05%, around five times more than the 8.05% industry standard, as data from Morningstar showed.
In line with bearish market sentiment surrounding tech stocks, TEAM’s stock has lost over 23% of its gains since that all-time high, dropping to $348.64 on 3 January 2022. By 18 May 2022, the price had lost an additional 53% of its value, falling to around $161.
Things started to look up once again when the TEAM share price surged 79% to $289.52 on 16 August following a positive fiscal and fourth-quarter results report.
The positive sentiment did not last. Atlassian’s stock price fell to $217.33, as of 4 October 2022, down around 25% since its August highs and a 37% year-to-date (YTD) loss.
Revenue surpassed expectations in Q4
In the fourth quarter of 2022, Atlassian’s total revenue amounted to $759.8m, up 36% from the $559.5m reported in the fourth quarter of 2021, surpassing analysts’ estimates of $724.28m. Earnings per share (EPS) amounted to $0.27, slightly beating analysts’ estimates of $0.26.
Quarterly subscription revenues for the company’s services surged by 55% year-on-year up to $597.2m, from $385.5m a year earlier.
The platform’s subscriber numbers stood at 242,623, adding over 8,000 new customers during the fourth quarter.
In a letter to shareholders, the company’s CEOs and co-founders highlighted that despite a “climate of widespread uncertainty” the company managed to outperform expectations:
The company also said that it was feeling positive about its 2023 quarterly and fiscal year earnings, expecting its Cloud revenue to surge by around 50% in the next two years.
Atlassian falls victim to hack attacks
Between June and August 2022, Atlassian released several reports addressing critical security flaws in a number of its services. The first flaw was reported in early June 2022, affecting its Confluence Server and Data Centre.
Even though the issue was resolved soon after, an article by The Hacker News in late September stated that the fixed issue was being “actively exploited for illicit cryptocurrency mining on unpatched installations”. The company did not address this.
In late August 2022, Atlassian released another report warning of “critical severity security vulnerability” affecting the company’s 7.0.0 version of the Bitbucket Server and Data Centre.
On 30 September 2022, the US Cybersecurity and Infrastructure Security Agency (CISA) added a critical flaw impacting Atlassian’s Bitbucket Server and Data Centre to the Known Exploited Vulnerability (KEV) catalogue, referencing evidence of active exploitation. A short description by CISA reads:
Following the news, the TEAM stock price fell by around 16.5 %, from over $260 on 12 September 2022 to $217.33 on 4 October.
In other news, on 31 August 2022, Atlassian joined the Value Stream Management Consortium (VSMC), a member association for enterprises and individuals working with Value Stream Management (VSM) platforms and practices. VSMC aims to help Atlassian improve the performance of its applications and drive customer value.
Analyst views on TEAM
Joe Neighbour, chief investment officer at Signa Centre, told Capital.com that despite robust growth, Atlassian's stock has been dropping due to “the weaker economic conditions” such as “supply shortages, rising inflation and rising interest rates.” He noted:
According to the technical analysis by Neighbour, TEAM could drop to $113 – a 47% decline since its current value (as of 3 October 2022). He explained:
“From a technical analysis perspective, a ‘Head and Shoulders’ top pattern completed on the move through support at $232 in April 2022. This is considered to be one of the most powerful reversal patterns using classic charting techniques.
“The rebound in price to $300 in August appears to have been a retest of the broken ‘neckline’ and the reaction from that level suggests we are now entering a bearish phase for the stock,” Neighbour explained.”
The analyst concluded that “until the wider economy begins to pick up, we are likely to see the share price remain under pressure in the short to medium term.”
Invezz data analyst Dan Ashmore added that the dip is “in line with a lot of the US Tech 100”, which is now down 32% on the year.
Ashmore noted that predicting where TEAM shares are headed is challenging, especially since the market is very sensitive to the US Federal Reserve’s (Fed) monetary policy tightening. The analyst said:
Neighbour agreed with the long-term bearish Atlassian stock forecast.
Atlassian stock forecast: Price targets for 2022-2025
Based on the consensus view of 16 analysts, the stock was rated a ‘moderate buy’, according to the data compiled by MarketBeat, as of 4 October, with twelve analysts rating it as a ‘buy’ and four a ‘hold’.
The average TEAM stock forecast for the next year was for the stock to rise to $317.83. The most positive Atlassian stock forecast saw TEAM increase to $430, while the lowest suggested it could fall to $165.
Meanwhile the algorithm-based forecaster Wallet Investor gave positive Atlassian stock predictions, as of 4 October, noting that TEAM is a “good long-term investment”.
In its Atlassian stock forecast for 2022, the site predicted the stock to reach $234.582, while its Atlassian stock forecast for 2025 saw TEAM shares rise to $328.291 by December that year. The site’s long-term Atlassian share price forecast for 2027 saw TEAM surge past $350 by January that year.
Note that analyst and algorithm-based TEAM forecasts can be wrong. Their predictions shouldn’t be used as a substitute for your own research.
Always conduct your own due diligence before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis on the stock. Keep in mind that past performance does not guarantee future returns. And never trade money that you cannot afford to lose.
FAQs
Is Atlassian a good stock to buy?
Whether TEAM is a good investment for you will depend on your own investment objectives and the research you have carried out on the stock. Remember, it’s very important to form your own opinion of a company’s prospects and its likelihood of achieving analysts’ targets. Keep in mind that past performance does not guarantee future returns. And never trade money that you cannot afford to lose.
Will Atlassian stock go up or down?
The consensus forecast from analysts, compiled by MarketBeat, as of 4 October, was that TEAM could rise to $317.83 in the next 12 months. The most positive Atlassian stock forecast saw TEAM increase to $430, while the lowest suggests a fall to $165. Note, however, that their predictions can be wrong. It’s important to remember that forecasts can be wrong. You need to carry out your own analysis on the stock and make your own mind up about its prospects.
Should I invest in Atlassian stock?
Whether you should invest in TEAM stock should depend on your personal circumstances and risk appetite. Investing involves risk and analysts are warning of a bearish market sentiment, especially among tech stocks and growth stocks. You should always do your own research and evaluate the level of risk you are prepared to accept before investing. Never invest money you cannot afford to lose.
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