11:55 AM EST, 01/16/2025 (MT Newswires) -- Atlassian Corp ( TEAM ) remains a top pick as the company is well-positioned to drive revenue growth and expand margins in fiscal 2026, due to a broader product portfolio, which suggests strong potential for exceeding estimates, Morgan Stanley said in a note Thursday.

The analysts said that they have a "positive thesis" on Atlassian's ( TEAM ) growth, expecting 20% revenue growth and 25% free cash flow growth over the next three years.

Key reasons for this outlook include expanding opportunities in three large markets, significant potential for cross-selling and upselling with a broader product portfolio, continued shift from Data Center to Cloud, sustained pricing power, and room for improved operational efficiency, especially with the use of GenAI for better developer productivity, according to the note.

Morgan Stanley raised its price target on Atlassian ( TEAM ) to $315 from $259 while keeping its overweight rating.

"We note that while our new price target is based on slightly higher estimates, we maintain a fair amount of conservatism in our underlying forecast drivers and do not account for any contribution from a potential Rovo product cycle," the analysts said.

Priced at $20 per user per month, Rovo targets companies with over 47,000 customers spending over $100,000 in Cloud annual recurring revenue, which could lead to a potential $2 billion to $4 billion annual revenue opportunity, the analysts said.

However, it's still early to determine how well Rovo will fit in the market, and the pricing model is expected to change. Most customers view Rovo as valuable but too expensive and have concerns about the user roll-out model, they added.

Price: 254.07, Change: +4.04, Percent Change: +1.62