Shares of cybersecurity company Rubrik (NYSE:RBRK) have been on a tear in recent months, having gained more than 60% in the last 90 days alone.
If you’re not familiar with the company, it sells software tools to customers that can then detect, defend against and even recover from cyberattacks, making it more of an end-to-end tool as opposed to a purely protective measure.
This approach, known as cyber resilience, is a fast-growing category of cybersecurity services. So what exactly is Rubrik’s potential in this space and how high can the stock go?
Rubrik Is Growing High Value Customers Really Fast
Unsurprisingly, Rubrik’s last earnings report was extremely strong. The company reported a 38% gain in ARR, which reached just over $1 billion. Quarterly revenue, meanwhile, saw a 43% increase to $236.2 million.
While the company continued to report GAAP losses, the amount it lost also narrowed considerably over the last 12 months. On a per-share basis, the company lost $0.71 per share in the last reported quarter, compared to a loss of $1.41 per share a year earlier.
Rubrik has succeeded in attracting a laundry list of high-value customers that have contributed to its surging ARR. The Q3 report detailed 2,085 customers contributing annualized revenues of $100,000 or more. This was an increase of 32% compared to the year-ago quarter, showing just how quickly large customers are flocking to Rubrik.
Financially, Rubrik is in reasonably good shape. Total assets have risen from $873.6 million a year ago to nearly $1.3 billion in the last reported quarter. Much of this gain came from a sharp increase in short-term investments to around $528 million, though Rubrik also still has more than $100 million of cash and cash equivalents on hand. Long-term debt totals about $317 million, a manageable amount given the assets on Rubrik’s balance sheet.
How Much Growth Could Rubrik Still Have in It?
In addition to its stunning top line growth, Rubrik stills appears to have lots of fuel in the tank to fire up more growth. Coming off of Q3’s results, management raised its full-year revenue guidance to the range of $860-862 million. This suggests that revenue growth could remain fairly high and Rubrik is likely to deliver another solid earnings report when it delivers its Q4 results.
Taking a longer view, there is a good chance that the company will keep its growth high over the coming years. Forward revenue growth is estimated to remain at about 22.4%. Though this represents a slowdown from the extreme highs the company has experienced recently, revenue growth at that level should still propel the company forward at a very respectable pace.
Despite strong expected revenue growth, Rubrik isn’t expected to turn a profit anytime in the near future. Indeed, losses are expected to expand somewhat in FY2026, making Rubrik’s share prices even more dependent on revenue growth. The good news is that if the company can keep acquiring new, high-value customers and raising its ARR quickly, these losses will prove to be a short-term sacrifice in exchange for strong long-term profitability.
Bulls can point to the fast-growing market as providing even more growth tailwinds. In 2024, the global cybersecurity market was projected to be worth about $193.7 billion. Between now and 2032, that market is expected to grow to over $560 billion implying a compounded annual growth rate of over 14% for most of the next decade.
What Do Analysts Project for Rubrik Shares?
While Rubrik seems to have strong growth opportunities, its surge over the last few months has brought it close to the fair value range projected by analysts.
The average 12-month price target for Rubrik is currently $74.16, about 7.5% higher than the $69.01 at which the stock trades right now.
Although this still leaves some projected upside in the shares, it seems that Rubrik’s price may have run too far too fast that it might struggle to keep pace with or outperform the market in the near future. With that said it appears to be technically breaking out now so there is a valid case that momentum might springboard it higher.
Is Rubrik Overvalued?
The fact that RBRK is already trading close to the average analyst price target also raises some questions about the stock’s valuation. At 13.0x sales, Rubrik’s price looks extremely high at first glance. These high multiples aren’t as uncommon in the cybersecurity world as they are in other sectors, however.
CrowdStrike Holdings, for instance, trades at 24.9x its sales. Cloudflare commands a similar valuation at 27.3x sales. So, while Rubrik is pricey by comparison to the universe of all American stocks, it looks much more reasonable when set against other cybersecurity stocks.
How High Could RBRK Shares Go?
Although Rubrik doesn’t appear to actually be overvalued, it may have plateaued near its fair value range for the time being. The surge in share prices since the Q3 report came out was well-deserved due to the company’s strong reported performance, but there’s little guarantee that the stock can keep moving higher with so much good news already baked in.
The fact that Rubrik might plateau for a while doesn’t mean that the stock won’t move higher in the long run, though. Continued revenue growth propelled by surging demand for cybersecurity services could allow RBRK shares to produce gradual gains, especially if management can keep its foot on the gas when it comes to acquiring enterprise-level customers that contribute large amounts of recurring revenue to the business.
Right now, RBRK is an attractive business, but its recently elevated share prices likely make it a better hold than a buy. Investors who bought early and have seen their shares rise swiftly in the past few months may still want to be able to take advantage of incremental gains going forward. Buying RBRK right now, though, may come with opportunity costs if the company can’t maintain an exceedingly high revenue growth rate or move toward profitability faster than currently expected.
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