Atlassian offers a range of team collaboration products for software developers, information technology managers and knowledge workers.
The Australian firm’s portfolio includes JIRA, which is used for problem tracking, chat app HipChat and Bitbucket, a source code repository hosting service.
Software Stock Analysis
Atlassian stock is currently rebounding off the key 10-week moving average. This serves as a buying opportunity. Its ideal buy point here is 374.88, but it is actionable up to 412.37.
TEAM stock is currently trading above its short-term moving averages, which is encouraging.
Investors will want to see the relative strength line pick up steam again. It has been taking a breather after a strong period of outperformance from late July until late September. The line gauges a stock’s performance compared to the broader S&P 500.
Atlassian stock has a near-perfect IBD Composite Rating of 97. While earnings are very good, it is stock market performance that is its strongest suit.
The stock’s 70% gain since the start of the year ranks it among the top 4% of stocks tracked overall in terms of price performance over the past 12 months.
Nevertheless, earnings are also impressive. Over the past three quarters earnings have grown by an average 29%, which exceeds CAN SLIM requirements.
While current action is encouraging, the market remains in a correction. This makes buying stocks more risky. Buying a smaller pilot position is one alternative.
CEO Touts Broad Demand
In the firm’s annual letter to shareholders, management said it expects subscription revenue growth year over year to be in the low-to-mid 40s percentage range in fiscal 2022. This will be the primary driver of revenue growth.
Co-founder and co-CEO Mike Cannon-Brookes said during the firm’s most recent earnings call in July that it was the broad growth of the business that made him confident of meeting this goal.
“The biggest strength in the number that gives me confidence, I would say, is the fact that it’s very across the board. So there’s not a particular area that is excelling here,” he said.
“We see strength across the software, agile and DevOps spaces. We see strength in ITSM (IT service management) and Jira Service Management and health and Confluence …,” he added.