Rubrik, Inc.: Under the Radar Cyber Security Stock Gains Traction

Key Points

• Rubrik is emerging as a leader in data protection for commercial and government clients.
• The guidance for Q4 is better than expected and potentially cautious, given the Q3 results. 
• Analysts are lifting their price targets and see the stock trading at new highs. 

Rubrik, Inc. NYSE: RBRK is gaining traction with its business and its share price. Up more than 100% in Q4, the stock price is on track to double again over the next year. The company is establishing itself as a leading cybersecurity company focused on data, backup, and recovery for commercial and government applications. The latest news includes FedRAMP approval and expanding services to drive sustained sequential and YOY growth for many quarters. Commercial clients include mega-caps PepsiCo NASDAQ: PEP, Allstate NYSE: ALL, Home Depot NYSE: HD, and technology leader Advanced Micro Devices NASDAQ: AMD. 

Rubrik Taps Into Billion-Dollar Government Cyber Security Market

Rubrik, Inc.’s FedRAMP approval is noteworthy for two reasons. The first is obvious: approval opens the door to the government market and the long-term contracts that come with it. The second is that the approval came on the recommendation of the National Nuclear Security Administration, which carries some weight. 

The takeaway is that the company will likely benefit from its FedRAMP approval. Cyber security threats are rising at a double-digit pace and accelerating in 2024, increasing scope and cost, and cyber security is in high demand by governmental agencies. U.S. governmental cyber security spending is estimated to top $27.5 billion in 2025, roughly double the 2024 estimate and at record high levels expected to be sustained. The nod from the NNSA makes Rubrik a top-shelf option. 

The company's business results since the IPO have been good. The first three quarters saw sequential revenue growth accelerate from 9.6% in Q2 to over 15% in Q3. The results also included better-than-expected guidance that suggests strength will continue. The company forecasted $232.5 million at the mid-point of the revenue range and may be cautious in its estimate. The forecast assumes a sequential contraction that goes against the trend. 

Catalysts for growth in calendar 2025 include the roll-out of new API tools. The tools will allow users to connect their data to critical cloud infrastructure at Microsoft Azure and Amazon AWS with Rubrik in place. The takeaway is that Rubrik is entering the realm of AI and can facilitate the secure development of AI and AI applications.

Analysts Sentiment Drives Price Action in Rubrik Stock 

The analyst sentiment trends are bullish for this stock, including increasing coverage, a rising consensus target, and high conviction. The number of analysts covering it reached 20 in December, up two for the month, with 18 or 90% rating it as a Buy. The price target lags the stock price in late December but is rising, up 50% in calendar Q4, with revisions providing a significant lift to the market. The high-end range of targets suggests a move to $83 is possible, another 18% upside from the critical resistance target, and higher targets are likely in 2025. 

Institutional activity is also lifting this market. The institutions have been buying this stock in volume since its IPO and have acquired more than 50% of it, with activity ramping in Q4. Holders include ETF and mutual funds, public and private investment capital and provide a stable support base. Their activity aligns with the market's bottom and subsequent rally to new highs. 

The technical outlook for Rubrik is solid. The 2024 uptrend is marked by high volume and bullish momentum, likely leading to higher share prices. The critical resistance is near $75 and will likely be tested in early January. A move to highs is a bullish signal. This stock could advance another $35 to hit the $110 level in that scenario, a move equal to the magnitude of the rally that came before it.