Atlassian (TEAM) is the IBD Stock Of The Day as the maker of collaboration software for developers and tech departments rebounds from its 50-day line. Atlassian stock is still up 76% from a year ago despite selling off in October like many enterprise software stocks.
The company stumbled after it issued disappointing guidance on Oct. 19, but Atlassian stock has clawed its way back since then. While Atlassian stock currently has an entry point of 98.31, its chart is working on a handle that could bring the buy point down to 89.92.
When a stock is consolidating, one sign of a strength is a flat base that finds support at its 50-day moving average. Institutional investors often use the 50-day line as a reference point.
Atlassian’s earnings growth has re-accelerated after dipping in the March quarter.
Atlassian Lacks Direct Sales Force
One key to Atlassian’s profitability has been the lack of a direct sales force. Atlassian markets products through paid search online. It also hosts customer events that foster a strong user community. Product engineering teams are big users of Atlassian software.
“Atlassian is on the short list of companies well-positioned to help developers build the next generation of software and, more broadly, help all workers effectively collaborate,” BTIG Research analyst Joel Fishbein said in a recent note to clients. He says Atlassian expanded from its roots in software development into human resources, finance and legal departments.
Atlassian’s revenue growth topped 40% in four of the past five quarters.
“Atlassian has raised prices numerous times over the past few years, and previous price increases have resulted in minimal customer turnover. We think these price increases will support top-line growth,” BMO Capital Markets analyst Keith Bachman said in his report to clients.
Atlassian stock climbed 3.2% to close at 83.06 on the stock market today.
Atlassian Stock: Microsoft, ServiceNow Competitors
Microsoft this summer acquired GitHub, a leading software development platform, for $7.5 billion in stock.
To compete more directly with ServiceNow, Atlassian in September purchased OpsGenie for $295 million. OpsGenie offers an incident management platform for tech departments. ServiceNow is on the IBD Leaderboard watch list.
Atlassian has formed alliances with Slack Technologies and Zoom Video Communications as it battles Microsoft in team collaboration tools.
Slack, Zoom Partnerships
“Atlassian has been prudently forming constructive partnerships while, perhaps most importantly, maintaining its valuable reputation as being a developer-friendly company,” BTIG’s Fishbein said.
San Francisco-based Slack is reportedly readying a $7 billion initial public offering in 2019. In July, Atlassian said it will no longer compete with Slack and it exited the workplace messaging space. Slack acquired intellectual property from Atlassian, which made a small investment in Slack.
Atlassian has integrated Zoom’s cloud-based, video-calling software with its flagship Jira software. Jira is a project-management and bug-tracking tool.
Founded in Sydney in 2002, Atlassian is incorporated in the U.K.
Atlassian stock went public in December 2015 at 21 per share, raising $462 million. It acquired Trello and its project management app for $425 million in early 2017.
To boost its Trello unit, Atlassian today said it acquired startup Butler and its automation tools.
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