TEAM is still up nearly 27% over the past year
Atlassian Corporation PLC (NASDAQ:TEAM) stock has been chopping lower since its late-October record high of $83.13, with pressure quickly emerging at several formerly supportive trendline, including the 40-day moving average. TEAM still clings to an 18% year-over-year lead, though it's shed 26.9% in 2022.
Despite this dramatic drop from its all-time peak, analysts are still optimistic, and an unwinding of some of this sentiment could put additional pressure on the equity. Of the 11 in coverage, eight call it a "strong buy," compared to just three "hold" ratings. Plus, the 12-month consensus price target of $427 is a 54% premium to current levels.
Meanwhile, the software company has increased its trailing 12-month revenues 16% since fiscal 2021 and a jaw-dropping 178% since fiscal 2018. TEAM is also estimated to grow its revenues by 23.3% and its earnings by 25.5% next year. However, Atlassian’s trailing 12-month net income is down by more than $411 million since fiscal 2018, despite increasing $166 million since fiscal 2021.
In addition, Atlassian stock has a massive valuation, with TEAM trading at an extremely high forward price-earnings ratio of 222.22 and an inflated price-sales ratio of 31.58. Overall, Atlassian stock is undeniably overvalued, even when considering the business’ strong revenue growth rate, making TEAM’s risk of dropping further in price over the next few years fairly high.