On Tuesday, Barclays (LON:BARC) reiterated its Overweight rating on Rubrik Inc (NYSE:RBRK) stock with a steady price target of $42.00. The firm's analysis highlighted five key points regarding Rubrik's second-quarter performance.
Firstly, they expect the Annual Recurring Revenue (ARR) for the first half of the year to roughly match the second half, predicting a net new ARR of approximately $30-35 million for Q2.
This estimate accounts for some carryover from Q1 and is viewed as a conservative benchmark against the backdrop of a robust cyber-resilience market, as evidenced by CommVault's improved outlook.
Barclays also addressed concerns regarding Rubrik's profitability, suggesting that the ARR contribution margin is a more critical metric for assessing profitability during the company's transition to a SaaS model. Analysts project that Rubrik could reach breakeven in terms of ARR contribution margin within the next one to two years.
Another point of interest is the upcoming expiration of the IPO lockup period, which is set to occur two days after Rubrik's earnings call on September 11, 2024. This is notably sooner than the typical 180-day lockup period and is considered significant information for investors.
Barclays noted that Rubrik might see an increase in its sales pipeline following a recent outage at CrowdStrike (NASDAQ:CRWD), as companies may seek to bolster their cyber-resilience. However, due to Rubrik's typically lengthy sales cycles, any potential impact on this year's performance is unlikely.
Lastly, Barclays referred to data from IDC, which shows that the Data Replication & Protection market is growing faster than anticipated, with Rubrik continuing to capture market share. This positive trend aligns with the firm's expectations of Rubrik's performance in the sector.
InvestingPro Insights
In light of Barclays' optimistic view on Rubrik Inc (NYSE:RBRK), recent data from InvestingPro provides additional context for investors considering the company's stock. According to InvestingPro, Rubrik holds more cash than debt on its balance sheet, which could offer some financial stability and flexibility. Moreover, the company's revenue has grown by 15.98% over the last twelve months as of Q1 2023, indicating a healthy expansion in its operations.
However, it's worth noting that Rubrik is not expected to be profitable this year, and it has not been profitable over the last twelve months, as reflected by a negative P/E ratio of -1.84 and an adjusted P/E ratio of -6.29. This aligns with Barclays' commentary on profitability and the transition to a SaaS model. Additionally, 8 analysts have revised their earnings upwards for the upcoming period, suggesting that there may be a positive outlook on the company's future earnings potential.
For investors looking for more detailed analysis, there are further InvestingPro Tips available at https://www.investing.com/pro/RBRK. These tips delve deeper into the company's financial health and market performance, providing a comprehensive toolkit for those interested in Rubrik's investment profile.
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