Atlassian (TEAM - Free Report) is well-poised to benefit from the growing demand for remote working tools in the post-pandemic era. The company is banking on partnerships to enhance its offerings with the likes of ThinkTilt, Chartio, Halp and Mindville. This, along with multiple product launches and a unique sales strategy, might accelerate Atlassian’s growth momentum. Concurrently, this might escalate research & development expenses as well as spending on sales activities, which in turn are likely to weigh on the company’s profitability.
Let us delve deeper into factors highlighting why investors should hold on to the stock for the time being.
Growth Drivers
With the rising demand for a remote work environment among top-notch companies globally, Atlassian, which is a remote-working software solution provider, is expected to register rapid growth. Its Confluence and Trello applications might aid organizations in collaborating and managing staff working anytime from anywhere, be it at home or a restaurant.
Acquisitions are expected to drive customer base and increase revenues while expanding Atlassian’s product portfolio. Partnerships with Amazon’s Amazon Web Services and Microsoft are likely to expand the company’s paying-user base.
Currently, the company’s subscription-based business model is helping it to generate stable revenues while expanding margins. Subscriptions have been Atlassian’s fastest-growing segment, which has witnessed a CAGR of over 65% between 2014 and 2021. This is anticipated to continue to improve the company’s top and bottom-line performances.
The company outpaced estimates in three of the trailing four quarters and missed once, the average surprise being 3.6%.
The Zacks Consensus Estimate of $1.69 for TEAM’s fiscal 2022 earnings suggests growth of 20.7% from the year-ago period. The long-term earnings per share growth rate is estimated to be 20%.
Primary Concerns
Over the past few years, Atlassian has been investing heavily to enhance its sales and marketing capabilities, particularly by increasing the sales force. The company is continuously increasing its investments in research and development to add new and innovative products to its portfolio. Such higher spending is likely to negatively impact its margins in the near term.
Atlassian is susceptible to security breaches and cyber-attacks due to its software-as-a-service-based business model. Any security breach can tarnish its image and garner negative customer confidence, thereby impacting client retention and renewal rates.
TEAM acquired 18 companies to enhance its product capabilities, increase the paying-user base and generate incremental revenues. However, such frequent acquisitions might add to integration risks and negatively impact Atlassian’s balance sheet in the form of a high level of goodwill.
Zacks Rank & Stocks to Consider
Currently, Atlassian carries a Zacks Rank #3 (Hold). Shares of TEAM have fallen 43.9% YTD compared with the Zacks Internet – Software industry’s decline of 48.5%.
Some better-ranked stocks from the broader Computer and Technology sector are Baidu (BIDU - Free Report) , Keysight Technologies (KEYS - Free Report) and Synopsys (SNPS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Baidu's second-quarter 2022 earnings has been revised 31 cents southward to $1.38 per share over the past 60 days. For 2022, earnings estimates have moved 3 cents north to $8.27 per share in the past 60 days.
Baidu's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 52.9%. Shares of BIDU have climbed 2.5% in YTD.
The Zacks Consensus Estimate for Keysight's third-quarter fiscal 2022 earnings has been revised 2 cents northward to $1.78 per share over the past 60 days. For 2023, earnings estimates have moved 5 cents north to $7.16 per share in the past 30 days.
Keysight’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 8%. Shares of KEYS have fallen 30.9% in YTD.
The ZacksConsensus Estimate for Synopsys’ third-quarter fiscal 2022 earnings has been revised 39 cents northward to $1.93 per share over the past 60 days. For 2023, earnings estimates have moved 62 cents up to $9.79 per share in the past 60 days.
Synopsys’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 2.7%. Shares of SNPS have declined 13.8% in YTD.
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With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
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Atlassian (TEAM - Free Report) is well-poised to benefit from the growing demand for remote working tools in the post-pandemic era. The company is banking on partnerships to enhance its offerings with the likes of ThinkTilt, Chartio, Halp and Mindville. This, along with multiple product launches and a unique sales strategy, might accelerate Atlassian’s growth momentum. Concurrently, this might escalate research & development expenses as well as spending on sales activities, which in turn are likely to weigh on the company’s profitability.
Let us delve deeper into factors highlighting why investors should hold on to the stock for the time being.
Growth Drivers
With the rising demand for a remote work environment among top-notch companies globally, Atlassian, which is a remote-working software solution provider, is expected to register rapid growth. Its Confluence and Trello applications might aid organizations in collaborating and managing staff working anytime from anywhere, be it at home or a restaurant.
Acquisitions are expected to drive customer base and increase revenues while expanding Atlassian’s product portfolio. Partnerships with Amazon’s Amazon Web Services and Microsoft are likely to expand the company’s paying-user base.
Currently, the company’s subscription-based business model is helping it to generate stable revenues while expanding margins. Subscriptions have been Atlassian’s fastest-growing segment, which has witnessed a CAGR of over 65% between 2014 and 2021. This is anticipated to continue to improve the company’s top and bottom-line performances.
The company outpaced estimates in three of the trailing four quarters and missed once, the average surprise being 3.6%.
The Zacks Consensus Estimate of $1.69 for TEAM’s fiscal 2022 earnings suggests growth of 20.7% from the year-ago period. The long-term earnings per share growth rate is estimated to be 20%.
Primary Concerns
Over the past few years, Atlassian has been investing heavily to enhance its sales and marketing capabilities, particularly by increasing the sales force. The company is continuously increasing its investments in research and development to add new and innovative products to its portfolio. Such higher spending is likely to negatively impact its margins in the near term.
Atlassian is susceptible to security breaches and cyber-attacks due to its software-as-a-service-based business model. Any security breach can tarnish its image and garner negative customer confidence, thereby impacting client retention and renewal rates.
TEAM acquired 18 companies to enhance its product capabilities, increase the paying-user base and generate incremental revenues. However, such frequent acquisitions might add to integration risks and negatively impact Atlassian’s balance sheet in the form of a high level of goodwill.
Zacks Rank & Stocks to Consider
Currently, Atlassian carries a Zacks Rank #3 (Hold). Shares of TEAM have fallen 43.9% YTD compared with the Zacks Internet – Software industry’s decline of 48.5%.
Some better-ranked stocks from the broader Computer and Technology sector are Baidu (BIDU - Free Report) , Keysight Technologies (KEYS - Free Report) and Synopsys (SNPS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Baidu's second-quarter 2022 earnings has been revised 31 cents southward to $1.38 per share over the past 60 days. For 2022, earnings estimates have moved 3 cents north to $8.27 per share in the past 60 days.
Baidu's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 52.9%. Shares of BIDU have climbed 2.5% in YTD.
The Zacks Consensus Estimate for Keysight's third-quarter fiscal 2022 earnings has been revised 2 cents northward to $1.78 per share over the past 60 days. For 2023, earnings estimates have moved 5 cents north to $7.16 per share in the past 30 days.
Keysight’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 8%. Shares of KEYS have fallen 30.9% in YTD.
The ZacksConsensus Estimate for Synopsys’ third-quarter fiscal 2022 earnings has been revised 39 cents northward to $1.93 per share over the past 60 days. For 2023, earnings estimates have moved 62 cents up to $9.79 per share in the past 60 days.
Synopsys’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 2.7%. Shares of SNPS have declined 13.8% in YTD.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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