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How Atlassian's Shares Rose 14.3% In May

By Anders Bylund – Jun 10, 2019 at 7:29PM

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One well-respected analyst firm upgraded the business software specialist to a buy, citing stronger-than-expected billings growth.

What happened

Shares of team-based business software developer Atlassian (TEAM -2.94%) surged 14.3% higher in May 2019, according to data from S&P Global Market Intelligence. The gains were powered by a rosy analyst review.

So what

Early last month, analyst firm Goldman Sachs upgraded Atlassian from "neutral" to "buy," with a target price of $125 per share. Goldman analyst Heather Bellini expected the company's fourth-quarter billings to come in near $376 million, far ahead of the $361 million Street consensus. Bellini also saw plenty of room for long-term growth thanks to Atlassian's "unique low-friction" sales model that lets the high-quality products do the talking.

A businesswoman manipulating a digital display floating in mid-air in front of her as a businessman watches closely.

Image source: Getty Images.

Now what

The fourth-quarter report at issue isn't due for another couple of months since Atlassian posted third-quarter results in April. We won't know whether Bellini was right or wrong until then. That being said, Atlassian has a proven tendency to crush Wall Street's revenue and billings estimates, sometimes by a tremendous margin. It's no surprise to see investors embracing a rosy billings forecast against that historical backdrop.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atlassian. The Motley Fool has a disclosure policy.

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