Cantor Fitzgerald raises Atlassian stock price target on cloud growth By Investing.com

Atlassian posted strong Q3 fiscal 2026 results, with EPS of $1.75 versus $0.98 expected and revenue of $1.79 billion versus $1.57 billion consensus. Cloud revenue grew 29% year over year and beat estimates by 4.5%, while Service Collection ARR topped $1 billion and RPO rose 37% to $4.0 billion. Cantor Fitzgerald raised its price target to $107 from $98 and kept an Overweight rating, though free cash flow missed due to $94 million of restructuring cash costs and another $76 million expected next quarter.

Analysis

The market is likely still underestimating how much of this print is a margin-reset story rather than a pure growth story. The combination of faster cloud growth, better RPO quality, and a near-term operating margin uplift from restructuring means the next two quarters could show a mechanically cleaner earnings trajectory even if top-line acceleration cools. That sets up a classic multiple expansion window for quality software: the stock does not need a heroic growth re-acceleration to re-rate, only proof that the new cost base is durable.

The more interesting second-order effect is competitive: accelerated data center purchases look temporary, but they may have pulled demand forward from customers who otherwise would have delayed migration decisions. If so, the next few quarters could see a digestion phase in legacy deployments, which could create a noisy comp and make the business look slower right when sentiment is improving. Meanwhile, the big beneficiary is not just the company itself but the broader cloud/DevSecOps ecosystem, where stronger Atlassian execution can pressure peers to defend pricing and spend more aggressively on product bundling.

The contrarian angle is that the market may be too focused on the free-cash-flow miss and not enough on the shape of conversion over the next 6–9 months. Restructuring cash outlays are temporary, so cash generation can snap back faster than consensus models currently imply. If that happens while margins expand as expected, the stock’s upside could be driven more by estimate revisions than by narrative improvement, which is usually when software names move the hardest.

Key Decisions for Investors

• Long TEAM into the next 1-2 earnings cycles: asymmetric setup if margin expansion and cash flow normalization show through; risk is that demand digestion after pulled-forward data center buying creates a softer guide.
• Buy TEAM Jan-2026 call spreads or risk reversals rather than outright calls: captures a re-rating toward the $100+ analyst consensus zone while limiting downside if FCF remains noisy for another quarter.
• Pair trade: long TEAM / short a lower-quality software name with weaker margins and slower cloud growth over the next 3-6 months; thesis is that investors will reward operating leverage and punish companies still spending to defend growth.
• If TEAM gaps sharply higher on the next print, trim into strength rather than chase; the cleaner entry is after the market tests whether the post-restructuring margin benefit is real, not just modeled.