Shares of Atlassian Corp (NASDAQ:TEAM) were climbing in early trading on Tuesday.
Enterprise customers are likely to drive "the next wave of cloud migrations," triggering accelerated cloud growth, according to Piper Sandler.
The Analyst: Rob Owens upgraded the rating for Atlassian from Neutral to Overweight, while raising the price target from $200 to $225.
The Thesis: While currently only 30% of the company's cloud revenues are from enterprise customers, 82% of the remaining data center seats are enterprise, Owens said in the upgrade note.
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"As these customers migrate to cloud, we think this will drive durable growth given the large uplifts seen for these customers, alongside more attractive NRR (net recurring revenue) dynamics," he added.
With new cloud products like Atlassian Intelligence and more improvements in the pipeline, "we believe enterprise migrations will pick up steam going forward," the analyst wrote.
Product innovation creates an enterprise cross-sell opportunity of more than $14 billion, which is so far underappreciated, he further stated.
TEAM Price Action: Shares of Atlassian had risen by 1.62% to $181.14 at the time of publication on Tuesday.
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