On Friday, Guggenheim maintained a Buy rating on Rubrik Inc (NYSE:RBRK) and increased the stock's price target to $72 from $52, following the company's strong third-quarter results for fiscal year 2025. Rubrik reported significant year-over-year growth in its subscription Annual Recurring Revenue (ARR), particularly in its Cloud ARR, which surged by 69%.
The firm's New Subscription ARR and New Cloud ARR also grew by 23% and 22% respectively. According to InvestingPro data, the company's overall revenue growth stands at 24.7% over the last twelve months, with a robust gross profit margin of 69.32%.
The company's overall business momentum was highlighted as a driver for the raised guidance for the fourth quarter of fiscal year 2025. Guggenheim noted Rubrik's ability to exceed consensus estimates and its potential to maintain this growth trajectory. Total (EPA:TTEF) ARR metrics, including the effects of perpetual maintenance, showed a robust 30% year-over-year increase.
InvestingPro analysis reveals that 10 analysts have revised their earnings upwards for the upcoming period, with analyst targets ranging from $40 to $76. Get access to over 12 additional InvestingPro Tips and comprehensive financial metrics with an InvestingPro subscription.
Rubrik's market position was strengthened by its modern architecture, which not only serves as a Backup and Recovery solution but also addresses data security challenges such as ransomware that traditional security vendors have struggled with.
Approximately one-third of the company's Net Revenue Retention (NRR), which is over 120%, comes from security modules, indicating the market's expansion due to Rubrik's offerings. With a market capitalization of $9.75 billion and an overall Financial Health score of FAIR according to InvestingPro, the company operates with a moderate level of debt.
Rubrik CEO Bipul Sinha's assessment that the company has broadened the scope of the Backup and Recovery market was cited, suggesting an increase in utility and relevance. With the introduction of the Data Security Posture Management (DSPM) solution, Rubrik is expected to capture additional market opportunities due to its proximity to data management.
The firm's decision to upgrade the price target to $72 is based on the anticipation of higher Free Cash Flow (FCF) in the future, reflecting confidence in Rubrik's continued innovation and its uncommon position in the market. Currently trading near its 52-week high of $54.90, InvestingPro's Fair Value analysis suggests the stock is trading above its Fair Value. Discover detailed valuation metrics and access the comprehensive Pro Research Report, available for Rubrik and 1,400+ other US stocks through an InvestingPro subscription.
In other recent news, Rubrik, Inc. has been the subject of favorable attention from Citi, which increased the company's target to $75 following a strong quarterly performance. The company reported third-quarter revenue of $236.2 million, marking a 43% increase year-over-year (YoY) and surpassing the consensus estimate of $217.5 million. The adjusted loss per share was narrower than expected at $0.21, compared to analysts' projection of a $0.40 loss.
Rubrik's Subscription Annual Recurring Revenue (ARR), a key growth metric, surged by 38% YoY to reach $1.0 billion. This development underscores the company's rapid expansion in the cybersecurity market. The company's customer base also saw significant growth, with 2,085 customers contributing over $100,000 in annual recurring revenue, reflecting a 32% YoY increase.
Recent developments include Rubrik raising its outlook for the full fiscal year 2025, now expecting revenue to be between $860-862 million, surpassing analysts' projection of $834.9 million. For the fourth quarter, the company forecasts revenue to be between $231.5 million and $233.5 million, which is above the consensus estimate of $225.1 million.
These projections and recent performance have reinforced Citi's confidence in Rubrik's ability to sustain a high-quality 25-30% growth trajectory in Subscription ARR.
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