Why Atlassian Stock Just Popped
Key Points
Jefferies analyst Brent Thill thinks it's time to buy Atlassian stock.
AI could be more of an opportunity than a threat for Atlassian.
- 10 stocks we like better than Atlassian ›
Is the Great Software Stock Slump of 2026 finally over?
IT specialist Atlassian (NASDAQ: TEAM) stock has been on a pronounced downturn, losing 73% of its value over the last 52 weeks. This morning, however, shares of Atlassian bounced back brightly, surging 4.1% through 12:05 p.m. ET.
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You can thank the friendly analysts at Jefferies for that.
Image source: Getty Images.
What Jefferies says about Atlassian
Analyst Brent Thill led a team of Jefferies analysts into the software sector wreckage this morning, "taking a fresh look at current levels considering both our new AI Risk Matrix and idiosyncratic fundamentals/catalysts," as StreetInsider.com reports. And what did Thill discover?
"Software will survive," because "business IP is embedded inside," is the analyst's conclusion. And one of the biggest winners from a rebound in software stocks will be Atlassian.
Although Thill admits that artificial intelligence is increasingly being used to generate software these days, he argues that "more AI-generated code = more need for IT collab," and that Atlassian is perfectly positioned to benefit from this. As the "fastest growing app name" that Jefferies covers, the analyst sees Atlassian growing 20% annually once things start shaking out in the IT sector -- and declares the stock a buy.
Is Atlassian stock a buy?
It's hard to argue with the numbers.
Priced at $18.9 billion in market capitalization, and with more cash than debt on its balance sheet, Atlassian generated just under $1.3 billion in positive free cash flow over the last 12 months. This works out to a price-to-free cash flow ratio of roughly 14.5x -- on a stock that most analysts predict will grow its profits better than 20% annually over the next five years.
Unless AI eats software entirely, that's a steal of a deal, folks. And it makes Atlassian stock a "buy."
Should you buy stock in Atlassian right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atlassian and Jefferies Financial Group. The Motley Fool has a disclosure policy.
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