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Atlassian (TEAM - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in the enterprise collaboration and workflow software space. The company designs, develops, licenses, and maintains various software products for teams to plan, track, collaborate and manage work or projects.
The stock was one of the best performers during the pandemic, but it has seen aggressive selling since Q4 of last year. Investors are now wondering what to do with the stock in a market that is pursuing value over growth.
Earnings were out last week and Atlassian had a great quarter. But looking forward, investors will have to decide if the valuation is fair.
About the Company
Atlassian is headquartered in Sydney, Australia and employs over 7,000 people. The company was founded in 2002 and IPO’d in late 2015.
Atlassian’s is valued at $44.5 billion and has a Forward PE of 204. The company holds a Zacks Style Score of “B” in Growth, but “F” in Momentum and in Value. That valuation really something of concern as investors have sold growth stocks hard over the last few months.
While earnings continue to exceed expectations, the valuation issue will likely hold the stock down.
Q2 Earnings
In late January, TEAM reported a 32% EPS beat and beat on revenues. This was the second straight beat and almost doubled the beat they saw from the previous quarter.
Atlassian guided Q3 lower, seeing $0.29-31 v the $0.39 expected. However, they did guide revenues higher.
Investors applauded the quarter, shooting the stock up 10% after hours. Unfortunately, this excitement was not long lived and the stock went into the red the next day.
While investors did jump back in this week, estimates have flatlined. This is something most investors do not want to see in a growth company with a high valuation.
The estimates are pretty much flat to trending lower into next year. For the current quarter, we see seen a drop from $0.39 to $0.38 over the last 30 days. For next year, we see a drop from $2.09 to $2.03 over that same time frame.
While the magnitude is not large on the estimate movements, it shows that perhaps growth could be stalling for a bit.
While investors are taking caution, analysts are dropping price targets for the stock:
Oppenheimer reiterated TEAM with Outperform and a price target of $430, down from $500.
Canaccord Genuity reiterated TEAM with Buy and price target of $375, lowered from $500
BMP Capital reiterated TEAM with Market Perform and a price target $382, down from $515.
Technical Take
The stock was up almost 150% at one-point last year. So you can’t blame investors for taking profits. Down almost 20% in 2022, the question is where the next move is headed.
The earnings gap higher was positive, but the selling into the gap was negative. A market bounce helped TEAM higher, but the 200-day has seen resistance.
Fairly important for the bulls to get this stock back above that 200-day and then test the $345 level which is the 50-day.
If the bears take out those recent lows, we could see valuation correct is a serious way.
In Summary
TEAM has been a great stock, but is the run over?
Investors might want to wait until both the fundamental and technical stories look better before they jump in.
For now, a better option might be Duck Creek Technologies (DCT). The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 300% EPS beat about a month ago.
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Bear of the Day: Atlassian (TEAM)
Atlassian (TEAM - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in the enterprise collaboration and workflow software space. The company designs, develops, licenses, and maintains various software products for teams to plan, track, collaborate and manage work or projects.
The stock was one of the best performers during the pandemic, but it has seen aggressive selling since Q4 of last year. Investors are now wondering what to do with the stock in a market that is pursuing value over growth.
Earnings were out last week and Atlassian had a great quarter. But looking forward, investors will have to decide if the valuation is fair.
About the Company
Atlassian is headquartered in Sydney, Australia and employs over 7,000 people. The company was founded in 2002 and IPO’d in late 2015.
Atlassian’s is valued at $44.5 billion and has a Forward PE of 204. The company holds a Zacks Style Score of “B” in Growth, but “F” in Momentum and in Value. That valuation really something of concern as investors have sold growth stocks hard over the last few months.
While earnings continue to exceed expectations, the valuation issue will likely hold the stock down.
Q2 Earnings
In late January, TEAM reported a 32% EPS beat and beat on revenues. This was the second straight beat and almost doubled the beat they saw from the previous quarter.
Atlassian guided Q3 lower, seeing $0.29-31 v the $0.39 expected. However, they did guide revenues higher.
Investors applauded the quarter, shooting the stock up 10% after hours. Unfortunately, this excitement was not long lived and the stock went into the red the next day.
While investors did jump back in this week, estimates have flatlined. This is something most investors do not want to see in a growth company with a high valuation.
Atlassian Corporation PLC Price and EPS Surprise
Atlassian Corporation PLC price-eps-surprise | Atlassian Corporation PLC Quote
Estimates
The estimates are pretty much flat to trending lower into next year. For the current quarter, we see seen a drop from $0.39 to $0.38 over the last 30 days. For next year, we see a drop from $2.09 to $2.03 over that same time frame.
While the magnitude is not large on the estimate movements, it shows that perhaps growth could be stalling for a bit.
While investors are taking caution, analysts are dropping price targets for the stock:
Oppenheimer reiterated TEAM with Outperform and a price target of $430, down from $500.
Canaccord Genuity reiterated TEAM with Buy and price target of $375, lowered from $500
BMP Capital reiterated TEAM with Market Perform and a price target $382, down from $515.
Technical Take
The stock was up almost 150% at one-point last year. So you can’t blame investors for taking profits. Down almost 20% in 2022, the question is where the next move is headed.
The earnings gap higher was positive, but the selling into the gap was negative. A market bounce helped TEAM higher, but the 200-day has seen resistance.
Fairly important for the bulls to get this stock back above that 200-day and then test the $345 level which is the 50-day.
If the bears take out those recent lows, we could see valuation correct is a serious way.
In Summary
TEAM has been a great stock, but is the run over?
Investors might want to wait until both the fundamental and technical stories look better before they jump in.
For now, a better option might be Duck Creek Technologies (DCT). The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 300% EPS beat about a month ago.