4 Atlassian Analysts On The Q2 Print, Outlook

Trello's parent company Atlassian Corporation PLC TEAM reported Thursday afternoon with fiscal-second quarter results that came in better than expected, as the company has continued to add new customers during the COVID-19 pandemic. Here's how some of the Street's top analysts reacted to the print.

The Atlassian Analysts

Raymond James analyst Robert Majek maintains a Market Perform rating on Atlassian's stock.

Needham analyst Jack Andrews maintains a Hold rating on Atlassian's stock.

KeyBanc Capital Markets analyst Alex Kurtz maintains an Overweight rating on Atlassian's stock with a price target lifted from $255 to $270.

Morgan Stanley analyst Keith Weiss maintains an Overweight rating on Atlassian's stock with a price target lifted from $270 to $275.

Raymond James On Atlassian's 'Good' Quarter, Valuation Concerns

Atlassian reported "good" second-quarter results with four key takeaways, Majek wrote in a note. They are: 

1) 23% year-over-year revenue growth at $501 million versus the Street's estimate for 15% growth

2) subscription revenue growth of 36% to $311 million and perpetual of $22 million

3) paid net adds grew by 11,617 sequentially versus the Street's estimate of 5,500

4) churn improved while tweaks in the Trello platform helped drive more low user accounts.

Despite a solid quarter, Atlassian's stock is trading at 28 times fiscal 2021 revenue estimates and investors may want to wait for a better entry point, the analyst wrote.

Needham: Atlassian On Track For Longer-Term Goals

Atlassian's earnings report signals the company's cloud migration strategy and its long-term benefits from its cloud investments are paying off and should generate long-term value, Andrews wrote in a note.

Specifically, the company's data suggests it is on track to hit its target of having 50% of Server and 66% of medium- and large- sized customers migrated to the cloud by fiscal 2023, the analyst said.

Despite an encouraging outlook, management's path towards achieving its goals decreases "business visibility and near-term pressure" to growth and margins, he said.

KeyBanc Bullish On Atlassian's Outlook

Atlassian added 467 net new workers in the quarter, with a focus on R&D; the launch of its Jira Service Management product for IT Service Management enterprise functionality; and cloud migration efforts, Kurtz wrote in a note.

While the near-term focus will weigh in on near-term revenue and margins, it will be a short-term headwind, the analyst said.

The research firm's revised $270 price target implies 29 times EV/FY23 sub revenue at 37% revenue growth versus peers in the mid-30s multiple range, he said.

Morgan Stanley: Multiyear Transition Underway For Atlassian

Atlassian's November investor day presentation focused on management's aggressive plan to transition its customer base to the cloud by ending its new license sales, Weiss wrote in a note. The company's Thursday report marks the beginning of this multiyear transition, he said. 

"Overall the timing of the inflection in subscription revenue growth remains the key unknown, but given the highly attractive unit economics of the cloud transition and best-in-class efficiency of the sales organization, we continue to see a path to durable 30% FCF growth post transition keeping us Overweight." the analyst wrote.

TEAM Price Action: Shares of Atlassian were trading higher by 0.82% early Friday afternoon at $228.89.

Courtesy photo.