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Atlassian (TEAM) stock inched higher on Aug. 26 after RBC Capital Markets initiated coverage on the enterprise software company with an "Outperform" rating. In his research note, analyst Matthew Hedberg assigned a $215 price target on TEAM, indicating potential upside of nearly 30% over the next 12 months. 

His bullish call is particularly significant as Atlassian shares have already been in a sharp uptrend, currently up roughly 200% versus their year-to-date low. 

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Hedberg and his team believe Atlassian's current growth expectations leave room for an upside surprise, particularly as several of the company's growth initiatives gain traction. 

They pointed to subscription ARR as the key metric to watch, with management guiding to roughly 18% year-over-year growth in fiscal 2027. RBC views that target as a relatively cautious baseline.

The firm expects momentum from the firm's Collections, Rovo, and AI-related usage to strengthen, while continued seat additions and cloud migrations could provide further support. 

"We believe this is a conservative starting spot," Hedberg said, arguing that consensus estimates could ultimately prove too low as those growth drivers build.

RBC is also pushing back against concerns that artificial intelligence could reduce the number of software seats companies need, potentially pressuring Atlassian's revenue growth. 

Hedberg believes that risk is overstated, noting that paid seats have actually continued to increase each quarter rather than contract. In his view, greater use of AI to create software could actually increase the need for tools that help teams coordinate increasingly complex workflows. 

Early customer trends appear to support that argument, with companies adopting AI-powered coding tools showing stronger engagement and faster expansion across Atlassian's platform. 

"The seat compression thesis is overblown," Hedberg said, as RBC sees multiple avenues for TEAM to sustain 20%-plus subscription ARR growth.

Other Wall Street analysts seem to agree with Hedberg's bullish view on Atlassian stock as well.

The consensus rating on TEAM shares is set at "Strong Buy" currently, with the mean price target of about $181 indicating potential upside of 8% from here. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com