Wall Street's sell-side analysts are, in general, an optimistic bunch. Even so, it's rare that every analyst covering a company has a price target above the current stock price. That would imply that there's near universal agreement that the stock is currently underpriced by the market. It's not easy to get that level of agreement among analysts.

But one incredible growth stock currently trades well below every price target from the 34 analysts covering it. In fact, one analyst recently reiterated his price target, suggesting that the stock could rise as much as 118% within the next year based on its price as of this writing.

Here's why analysts are so bullish on Atlassian (TEAM -2.05%).

An AI-powered cloud business

Morgan Stanley analyst Keith Weiss thinks Atlassian shares could be worth $320 within the next year. The big driving force behind the valuation is Atlassian's shift to a cloud-first model.

Atlassian develops enterprise software specializing in project planning, collaboration, and service management. Over 300,000 customers use its software, ranging from individuals all the way up to big enterprises with thousands of employees.

The company is planning to sunset the option to install its software in private data centers, instead requiring customers to subscribe to its own cloud platform. That will start next March, when the company stops selling new subscriptions for the data center software. Two years later will be the last date for existing customers to renew their subscriptions, and the entire offering will end in March of 2029.

The company is already seeing excellent progress migrating customers to the cloud. Management said migrations increased 60% year over year during fiscal 2025. It expects that trend to continue over the next few years.

Migrating customers to the cloud comes with several advantages for Atlassian. First and foremost, it simplifies its software development as it only has to worry about the cloud platform instead of all types of iterations of data centers used by its customers. That will enable it to roll out new features or modules and upsell customers, generating additional revenue.

Artificial intelligence is a key growth driver for Atlassian's cloud revenue, as it offers more robust capabilities on its cloud platform. It added AI capabilities to the Premium and Enterprise editions of its products in 2023, and it saw 40% growth in annualized recurring revenue for those products in 2025. It now counts over 2.3 million AI users. As it continues to roll out new AI features, cloud migrations will accelerate, as will net revenue retention, which already sits at an impressive 120%.

The cloud has one more benefit for Atlassian. It can renegotiate contracts to require more upfront revenue. Weiss expects that factor to show up in its fiscal 2026 earnings, with strong revenue growth and operating margin expansion.

Management reiterated its expectations to generate revenue growth at an average rate of 20%-plus per year between 2025 and 2027. With 2025's revenue coming in just under 20% higher and the outlook for 18% growth in fiscal 2026, management is suggesting that revenue will accelerate in fiscal 2027. Whether that revenue acceleration comes within the next year or in a couple of years, Atlassian is well-positioned to see its operating margin expand as it sunsets the data center business and improves its cloud offering.

Can the stock climb 118%?

Atlassian's stock exceeded $320 per share back in 2021. However, the stock price has been cut by roughly two-thirds since hitting its peak. Investors today have an opportunity to pick up shares at a relative bargain.

Not only has the stock come down in price, but Atlassian's operations have improved. Its stock now trades for just 6.5 times management's fiscal 2026 sales outlook. Its adjusted price-to-earnings ratio of 35, based on analysts' forward expectations, is very attractive for a company growing revenue by 20% per year with potential to expand its profit margin.

Analysts' expectations for Atlassian are high -- higher than management's own expectations. But even if the company only manages to meet management's conservative outlook, the stock looks underpriced at the current level. It could easily outperform the market. Whether it hits $320 per share will depend on a lot of factors, some within Atlassian's control and many outside of it.