(Bloomberg) -- Rubrik Inc.’s third-quarter results on Thursday are a crucial factor in whether its stock price has more room to run, having already jumped more than 50% since the last release.
The Microsoft Corp.-backed cybersecurity provider is in a good place because of the sheer demand for the products and services it provides, analysts said. But Rubrik will have to astound Wall Street with an earnings beat and lofty guidance — as it did in early September — for its shares to continue soaring.
“The setup here is solid given positive datapoints,” Barclays analyst Saket Kalia wrote in a Nov. 20 note. He pointed to a Barclays survey of chief information officers that showed data security is a spending priority, as well as solid results from competitor CommVault Systems Inc. as catalysts for Rubrik’s results and shares.
Analysts expect Rubrik to report a loss of 40 cents per adjusted share on $218 million in third-quarter revenue. The revenue figure would be a 35% jump from the same period a year earlier.
In its second-quarter report, Rubrik also lifted revenue guidance for the full year to a range of $830 million to $838 million, beating the average analyst estimate. That release came just ahead of when a restriction preventing insiders from selling was due to expire.
Rubrik’s initial public offering exceeded the company’s goal, raising $863 million in April, but its share price was uninspiring during its first few months as a publicly-traded company. The stock failed to eclipse its first trade of $38.60 until mid-October.
Now, Rubrik trades at a premium to cybersecurity peers and Wall Street overwhelmingly favors its shares, with 18 buy ratings, one hold and no sells from analysts. That is because there is fierce demand from large companies for the data management and protection tools it provides, especially after a disastrous content update by competitor CrowdStrike Holdings Inc. crashed millions of computers around the world.
“We see data resilience as becoming increasingly important in light of the CrowdStrike outage,” Cantor Fitzgerald analyst Jonathan Ruykhaver said in a Dec. 2 note.
Growing adoption of artificial intelligence at big companies — which means related data will need to be backed up and secured — adds a long-term tailwind to Rubrik shares, he wrote.
Cantor has the highest price target across Wall Street for Rubrik, at $58, implying about 9% upside from where shares currently trade. While that values Rubrik at a premium to cybersecurity peers, the multiple is justified due to the company’s strong position in cyber resilience, Ruykhaver said in his note, where he reiterated an overweight rating.
Rubrik’s rally has already surpassed the average price target of $48 per share. Its shares were trading around $53 on Wednesday.
Strength in Rubrik’s shares, combined with its competitive position, prompted Guggenheim Partners to boost its price target to $52 from $48 in November, while maintaining its buy rating.
Rubrik is poised to outperform estimates for total revenue and subscription annual recurring revenue, Guggenheim’s John DiFucci said in a Nov. 18 note. He also predicts Rubrik will raise full-year guidance, though possibly by a narrower margin than previous quarters. Thursday’s release is Rubrik’s third as a public company.
“The beat may be less than the last couple of quarters as the company settles into its status as a public company,” DiFucci wrote.
However, Guggenheim’s channel checks during the quarter suggested strong demand as well as companies making cybersecurity a higher priority in budgets. That makes DiFucci confident that Rubrik’s third and fourth quarter results, combined, will lead to a higher full-year forecast.
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