Atlassian's (NASDAQ:TEAM) stock soared about 17% on Friday after the first quarter fiscal 2025 results and outlook saw praise from analysts.

Morgan Stanley kept its Overweight rating on Atlassian and raised the price target on the stock to $259 from $224.

Analysts led by Keith Weiss said that a broader solution portfolio using Generative AI, or GenAI, capabilities of Atlassian Intelligence provides the monetization avenue for the heavy investment put into development and the Cloud platform. The first quarter's Cloud revenue growth of over 31% year-over-year shows an initial yield on this investment, and the analysts expect to see more in calendar year 2025.

The 31% cloud growth well exceeded investor expectations in the first quarter, and has helped garner credibility around the conservatism of guidance, the analysts added.

Weiss and his team added that operating margins at 22.6% were about 360 bps ahead of consensus in the first quarter, however, weaker billings (tough comps) and higher bonus payouts left free cash flow, or FCF, short of consensus. The second quarter outlook came in ahead of consensus for total revenues and cloud revenue, and was inline with consensus on operating margins, according to the analysts.

KeyBanc upgraded Atlassian's stock to Overweight with $260 price target following the results.

The analysts said that coming off a strong fiscal first quarter results, they feel better that guidance is properly set to facilitate a more consistent beat/raise cadence going forward.

Stable paid seat expansion over the past two quarters, along with a risk-adjusted guidance framework that implies a deteriorating macro, and data points from KeyBanc's recent surveys, that point to some optimism in IT budgets in 2025, creates a positive setup, according to the analysts.

In addition, KeyBanc sees several catalysts to accelerating growth beyond fiscal 2025, including — more focused sales execution on up-sell/cross-sell, including AI (Rovo, Atlassian Intelligence); higher than typical Cloud pricing increases; and data center migrations to Cloud, present a sizable opportunity with Atlassian's largest and most strategic customers.

Meanwhile, Mizuho reiterated its Outperform rating and raised the price target on the stock to $240 from $200.

The analysts noted that the flurry of innovation that Atlassian has unveiled recently, with Rovo the most intriguing new product, is equally impressive as the results and guidance.

Broadly, Mizuho continues to believe the company's multi-year growth prospects are better than most realize, and this includes pricing power and what should be a few years of significant Data Center–to-Cloud migrations.

Piper Sandler maintained its Overweight rating on the stock and increased the price target to $265 from $225.

The analysts said that the first quarter results ticked all the right boxes. Stable cloud growth of around 31% year-over-year meaningfully outperformed as macro headwinds remained stable and sales execution was solid, leading to a raise to full-year expectations.

Related tech stocks: Fair Isaac (FICO), MicroStrategy (MSTR), Applovin (APP), SAP (SAP) and Datadog (DDOG) were all largely flat at market open on Friday.