On Wednesday, KeyBanc adjusted its outlook on Rubrik Inc (NYSE:RBRK) shares, increasing the price target to $48 from $46, while maintaining an Overweight rating on the stock.
This move reflects the company's robust first-quarter annual recurring revenue (ARR), which surpassed expectations by $35 million. Rubrik's performance was particularly strong in large deal acquisitions, notably with healthcare sector customers who faced cyber incidents during the quarter.
The company's net new ARR for the first quarter marked a 22% sequential increase from the fourth quarter, contrasting with the approximately 24% sequential decline experienced in the same period over the previous two years. Rubrik's guidance for the second-quarter revenue and ARR for the fiscal year 2025 were both projected to exceed previous estimates.
Additionally, the FY25 subscription contribution margin is expected to align with prior forecasts as the management continues to invest in response to the increasing demand.
Key performance indicators (KPIs) for Rubrik have shown significant year-over-year growth, with the number of customers spending over $100K and $1M increasing by 41% and 61%, respectively. The net expansion rate (NER) remained above 120%. KeyBanc's positive outlook is further bolstered by Rubrik's position as a leader in the backup and recovery sector and its evolving data security platform.
The firm sees a considerable opportunity for Rubrik to capture market share in the $11 billion backup and recovery market, especially with its offerings that emphasize cyber resilience.
Rubrik's growth prospects are also tied to the rising frequency and severity of ransomware attacks, which are prompting enterprises to shift away from legacy solutions that currently hold more than half of the market share. KeyBanc's revised price target is based on higher ARR and revenue estimates for Rubrik.
In other recent news, Rubrik Inc has been the focus of several investment firms following its impressive quarterly results. The company's revenue exceeded expectations with a 38% year-over-year increase, as reported by Citi, who maintained a Buy rating on the stock and increased its price target to $47.00.
Rubrik's subscription Annual Recurring Revenue (ARR) also showed remarkable growth, with a 45% year-over-year increase and a 22% quarter-over-quarter increase in net new ARR.
In addition to Citi, BMO Capital maintained its Outperform rating on Rubrik stock with a consistent price target of $40.00, acknowledging the company's substantial surpassing of ARR growth estimates.
Furthermore, Wells Fargo (NYSE:WFC) reiterated its Overweight rating on Rubrik stock with a price target of $42.00, highlighting the company's effective execution and the rising demand for its security capabilities.
Several other firms have also shown interest in Rubrik. Cantor Fitzgerald initiated coverage on Rubrik stock with an Overweight rating and a $50.00 price target, citing the company's growth potential and unique approach to data security. Rubrik's recent developments have been marked by consistent growth and positive analyst ratings, indicating a strong market position and effective business strategy.
InvestingPro Insights
InvestingPro data highlights Rubrik Inc's impressive gross profit margin of 76.91% for the last twelve months as of Q4 2024, signaling strong operational efficiency in generating profits from its revenues. Despite challenges in profitability, as analysts do not anticipate the company to be profitable this year, Rubrik has demonstrated a significant return over the last week with a 12.29% price total return, reflecting positive investor sentiment in the short term.
InvestingPro Tips suggest that while Rubrik operates with a moderate level of debt, its short-term obligations currently exceed its liquid assets, which could pose liquidity challenges. Additionally, the company has been trading at a high revenue valuation multiple, which may be a point of consideration for value-focused investors.
For those interested in a deeper analysis, InvestingPro offers more tips to help evaluate Rubrik's financial health and growth prospects. With the use of coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to an extensive range of InvestingPro Tips that can further inform investment decisions. There are currently 7 additional tips available for Rubrik on InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.