Posted on November 22nd, 2021
Atlassian Corp. Plc. (TEAM) experienced soaring growth over the past three months, dramatically outperforming the S&P 500. The software company was added to the WhaleWisdom Heatmap in the third quarter of 2021 and achieved an impressive number one rating. Hedge funds were actively buying, and Atlassian’s stock rose by approximately 244.3% over the past 2-years, compared to the S&P’s gain of about 50.7%.
Atlassian is an Australian software company that operates through subsidiaries based around the world. Some well-known subsidiaries include Atlassian, Inc., which develops application software for communication, collaboration, tracking, management, and developmental solutions, and OpsGenie, Inc., a leader in incident alerts and on-call schedule management. Atlassian Pty. Ltd is another subsidiary focused on issue tracking and collaboration that offers tools for software development teams to create, build and launch products. Atlassian has generally fared well during the coronavirus pandemic. As much of the workforce shifted to remote work, Atlassian’s collaboration and management tools such as Jira and Trello provided needed flexibility.
Hedge Funds Take Notice
Atlassian garnered the attention of hedge fund managers, and in the third quarter, aggregate 13F shares increased to about 43.8 million from 41.2 million, representing an increase of approximately 6.3%. Of the hedge funds, 32 created new positions, 65 added to an existing holding, 24 exited, and 60 reduced their stakes. In contrast, Institutions were selling, with aggregate holdings decreasing by about 117.2 million to approximately 117.2 million from 118 million. Also, the 13F metrics between 2019 and 2021 suggest that Atlassian’s investment potential has been solid and consistent.
Analysts are optimistic about the stock and raising price targets. BMO Capital Markets analyst Keith Bachman kept a Market Perform rating on shares while raising the firm’s price target on Atlassian to $515 from $345. Bachman shared that the company has been successfully navigating its transition to the cloud, meeting user needs, and has the potential to increase prices modestly in the future. Joel Fishbein of Truist Financial raised the firm’s price target on Atlassian to $500 from $400 and kept a Hold rating on shares, noting long-term opportunities for growth in the cloud. Analysts from Baird and Oppenheimer & Co. both kept Outperform ratings on Atlassian’s shares and raised price targets. Baird increased their price target to $520 and Oppenheimer to $500, with both firms speaking to smooth customer migrations to the cloud. Canaccord Genuity analyst David Hynes kept a Buy rating on shares and raised the firm’s price target on Atlassian to $500 to $325 due to increased expectations for subscription growth.
Atlassian’s shares are up, and analysts expect to see revenue continue to rise over the next two years for the software company, with increases in growth from 2022 to 2023 that could bring earnings to $1.60 by June 2022 and $2.06 by June 2023. This prediction for strong growth may also bring revenue to an estimated $2.6 billion in 2022 and approximately $3.2 billion in 2023. Atlassian also announced In October 2021 that the first quarter subscription revenue was up 57% and has raised expectations for continued revenue growth.
Atlassian’s year-to-date growth is certainly encouraging for investors, and multi-year estimates speak to the stock’s potential for long-term growth. The software company continues to thrive through the pandemic. Analysts’ ratings and outlooks present an attractive opportunity for investors.