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Atlassian Named Top Software Pick by Mizuho on Pricing Power, Target Raised to $215
Summary
Mizuho has designated Atlassian as its top pick among large-cap software stocks, increasing its price target on the company and citing significant growth potential from recent cloud price hikes and a new usage-based billing model.
Mizuho analysts have named Atlassian Corp. (NASDAQ:TEAM) their top pick in the large-cap software sector, raising their price target to $215 from a previous $175. The firm maintained its Outperform rating on the stock, citing the collaboration software maker's strong pricing power as a key catalyst for future growth.
Pricing Strategy Fuels Optimism
The upgraded outlook is underpinned by two significant monetization initiatives at Atlassian. According to Mizuho, these changes position the company for stronger-than-expected performance.
- Cloud Price Increases: Atlassian recently implemented price changes for its cloud versions of Jira Software, Confluence, and Jira Service Management, effective October 13. Mizuho estimates this will result in an overall list price increase in the high single-digit range of 7% to 10%.
- Usage-Based Billing: The company is also expanding usage-based pricing across its cloud products. While usage monitoring is already active, billing is set to commence on December 3. A check with a large channel partner suggests approximately 10% of cloud customers could face incremental charges initially, with that figure expected to grow materially through fiscal year 2027.
AdAnalyst Outlook and Valuation
Mizuho believes Atlassian's multi-year growth prospects are better than many investors realize. Beyond the new pricing models, the firm pointed to a multi-year tailwind from customers migrating from on-premise Data Center products to the cloud. The channel partner reportedly characterized the new usage-based pricing as potentially Atlassian’s most significant initiative for fiscal 2027.
The firm's new $215 price target is primarily derived from an updated discounted cash flow (DCF) model. The analysts noted that the stock trades at an estimated enterprise value-to-sales multiple of 6.4 times for calendar year 2026 and 5.7 times for 2027. The upgrade follows a strong fiscal fourth-quarter report from Atlassian, where cloud revenue growth accelerated to 31% year-over-year.
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