Barclays believes investors should pick up Atlassian shares as its customer activity picks up. Analyst Ryan MacWilliams upgraded the Australian-American software company, which develops and maintains software and provides software hosting services, from equal to weight. He raised his price target by $40 to $275, implying a 34.3% upside from Wednesday’s close. Shares rose 8.3% in the quarter but have lost roughly 11.2% this year amid concerns about slowing organic growth in Atlassian’s cloud business, which accounts for more than half of total revenue. In early February, the company beat second-quarter earnings and revenue estimates and gave positive guidance for fiscal 2024 for cloud and data center revenue growth. According to MacWilliams, rising multi-year data center and cloud bookings from customers, as well as increased software developer jobs, support the company’s margins and growth in fiscal 2025 and beyond. He indicated expectations that approximately 80% to 90% of the company’s data center users will migrate to the cloud in the next three years. “We think TEAM could live up to it [free cash flow] margin expansion in the short term as enterprise customers migrate from servers to DC/Cloud and as TEAM begins to cycle migration investments in 2H24/FY25,” MacWilliams wrote in a Thursday note. “We also believe in a healthier growth profile with more business users on Cloud Solutions warrants higher multiples given improved revenue durability.” The analyst’s better case assumes roughly 28% revenue growth in 2024, which he thinks could happen if Atlassian continues to invest in its own revenue generators or continue to grow its external portfolio. He said the company’s shares trade at a discount to high-growth companies with similar margin profiles. “We believe TEAM is well positioned within the DevOps space due to its strong PLG growth story and attractive unit economics,” he said is. we think TEAM’s business model and rev. growth could look cleaner after the migration.” Atlassian’s share price rose 2.3% on Thursday.