On Wednesday, Citi showed continued confidence in Rubrik Inc (NYSE:RBRK), increasing its price target slightly to $47.00 from the previous $46.00, while reiterating a Buy rating on the stock. The firm's analyst praised Rubrik's debut as a public company, highlighting its strong execution and the robust annual recurring revenue (ARR) from subscriptions, which continues to grow at an impressive rate.
Rubrik's recent financial results have exceeded expectations, with a notable 12-point beat on revenue, marking a 38% year-over-year increase. The company's subscription ARR showed significant strength, maintaining a growth rate of over 45% year-over-year, with a noteworthy 22% quarter-over-quarter increase in net new ARR during what is typically a slower fiscal first quarter. A standout performance in Cloud ARR, which soared by more than 100% year-over-year, was particularly commendable as it was driven by an uptick in large deals.
Furthermore, Rubrik has been making strides in reducing its losses, although they remain substantial. The firm's guidance for the second fiscal quarter and the full year is modestly optimistic, both for the top and bottom lines, with an even more robust outlook for subscription ARR throughout the year. This positive trajectory has led Citi to adjust its earnings forecasts upward for Rubrik.
The analyst underscored the company's ability to sustain a steady pace of outperformance, suggesting that the revised price target reflects a conservative estimate compared to the company's actual results. Rubrik's solid performance and positive outlook underpin Citi's decision to maintain a Buy rating and increase the price target to $47.00.
In other recent news, Rubrik Inc has been the focus of multiple investment firms following its impressive performance in its first quarter as a public company. BMO Capital maintained its Outperform rating on Rubrik and kept its price target steady at $40.00, acknowledging the company's significant surpassing of subscription Annual Recurring Revenue (ARR) growth estimates. Rubrik's recent quarterly report showed an ARR growth nearly 8 percentage points above BMO Capital's projections, leading to a slight upward revision of BMO's estimates for the company.
In addition to BMO Capital, Wells Fargo (NYSE:WFC) reiterated its Overweight rating on Rubrik with a consistent price target of $42.00. The company reported an ARR of $856 million, a 46% year-over-year increase, and a Cloud ARR that surged by 104% year-over-year to $606 million. Rubrik's successful quarter and the raised annual outlook underscore the company's effective execution and the burgeoning demand for its security capabilities.
Several other firms have also shown interest in Rubrik. Cantor Fitzgerald initiated coverage on Rubrik with an Overweight rating and a $50.00 price target, citing the company's growth potential and unique approach to data security. Barclays (LON:BARC) assigned an Overweight rating and a price target of $41.00, highlighting Rubrik's growth potential within the backup software market and its strong cybersecurity portfolio.
InvestingPro Insights
As Rubrik Inc (NYSE:RBRK) continues to garner attention from investors and financial institutions alike, insights from InvestingPro provide additional context to Citi's optimistic stance. Notably, Rubrik has been impressing with its impressive gross profit margins of 76.91% over the last twelve months as of Q4 2024, which is a testament to the company's efficient operations and cost management. Additionally, the company has experienced a significant return over the last week, with a 12.29% increase in its stock price, reflecting positive investor sentiment and market response to recent developments.
While analysts have concerns about Rubrik's profitability in the near term, with expectations of the company not being profitable this year, the InvestingPro platform offers a broader range of metrics and analysis, including the fact that the company is operating with a moderate level of debt and has not been profitable over the last twelve months. These are important considerations for investors looking to understand the full picture of the company's financial health.
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