RBRK: Cyber Resilience Demand And ARR Execution Will Support Future Repricing

We are trimming our Rubrik fair value estimate from US$110.86 to US$109.05 as analysts recalibrate price targets lower, citing softer peer multiples, a slightly higher discount rate and some caution around security budgets and competition, even as they continue to flag potential for sales growth and annual recurring revenue outperformance.

Analyst Commentary

Recent Street research on Rubrik points to a mixed setup for investors, with some firms cutting price targets while others highlight upside around growth execution and annual recurring revenue.

Bullish Takeaways

Bullish analysts see room for an annual recurring revenue beat over the near term. If achieved, this would support Rubrik's current valuation and help justify premium growth expectations.
Some are comfortable with a mid 20s percent sales growth outlook. They frame Rubrik as still in a growth phase where execution on the top line can matter more than short term margin swings for equity value.
The risk or reward skew is described as attractive at current levels. In their view, upside from stronger execution could outweigh downside from current concerns already reflected in price targets.
One major bank upgraded Rubrik to an Outperform rating with a US$97 price target, signaling increased confidence that management can deliver on growth and product adoption assumptions embedded in their models.

Bearish Takeaways

Bearish analysts are trimming price targets, citing softer peer multiples that mechanically pull Rubrik's valuation marks lower when they recalibrate comparable company frameworks.
There is incremental caution on security budgets, which could weigh on new deal activity or expansion rates and introduces more uncertainty around how quickly Rubrik can scale revenue.
Incremental competitive concern is also cited, suggesting that Rubrik may need to work harder on differentiation and win rates, which can influence long term margin structure and pricing power.
Some price targets have been reset into the US$95 to US$100 range, which reflects a more conservative stance on how much investors should pay today for the current growth and profitability profile.

What's in the News

McLaren Racing entered a multi-year technology partnership with Rubrik, making Rubrik an Official Partner of the McLaren Mastercard Formula 1 Team and Arrow McLaren IndyCar Team. Rubrik will secure critical racing and engineering data for performance and resilience (Client Announcements).
Rubrik announced Rubrik Security Cloud Sovereign, aimed at organizations that require full control over data location and access. The offering includes immutable protection across on-premises, cloud, and SaaS environments and threat detection that operates within customer boundaries (Product Related Announcements).
Rubrik issued earnings guidance for the fourth quarter of fiscal 2026, expecting revenue of US$341 million to US$343 million. For the full year of fiscal 2026, Rubrik expects revenue of US$1.28b to US$1.282b (Corporate Guidance).
Rubrik unveiled Rubrik Agent Cloud for Amazon Bedrock AgentCore to monitor, govern, and remediate AI agents across multi-cloud infrastructure. Capabilities include the ability to undo unwanted agent actions and support AWS customers focused on AI-driven workloads (Client Announcements).
Rubrik introduced Rubrik Intelligent Business Recovery for Microsoft 365 and DevOps Protection for Azure DevOps and GitHub, targeting backup and orchestrated recovery after cyber incidents and outages for both collaboration tools and software development pipelines (Product Related Announcements).

Valuation Changes

Fair Value Estimate: Trimmed slightly from US$110.86 to US$109.05, a reduction of about US$1.81 per share.
Discount Rate: Adjusted marginally higher from 8.66% to 8.71%, reflecting a small increase in the required return assumption.
Revenue Growth: Held essentially unchanged at about 22.50%, indicating no material shift in the growth outlook used in the model.
Net Profit Margin: Reduced from 12.75% to 12.02%, pointing to slightly more cautious expectations on future profitability levels.
Future P/E: Raised from 118.66x to 124.01x, implying a modestly higher earnings multiple applied to projected results.

Rubrik's innovations and strategic cybersecurity focus enhance market share, revenue growth, and competitive positioning while expanding their total addressable market.
Partnerships and enhanced recovery capabilities leverage enterprise needs, improving customer retention and profitability, fueling earnings growth and expanding their data security footprint.
Economic and competitive pressures, along with uncertainties in AI and cloud strategies, pose risks to Rubrik's revenue growth and financial stability.

Catalysts

About Rubrik

Provides data security solutions to individuals and businesses worldwide.What are the underlying business or industry changes driving this perspective?

Rubrik's strategic focus on cyber resilience, particularly through innovations like their Rubrik Security Cloud and integration with DSPM, positions them strongly against competitors, suggesting potential future gains in market share and revenue growth.
The company's pivotal role at the intersection of data security and AI, especially through products like Annapurna, can expand their total addressable market (TAM), potentially driving future revenue growth and enhancing their market position in this expanding field.
Strategic partnerships, such as with Microsoft, support Rubrik's offerings in Azure and M365 environments, which can foster growth in the adoption of their data security solutions, positively impacting revenue and customer expansion opportunities.
Rubrik's expanded capabilities in identity recovery and Active Directory forest recovery address critical enterprise needs, providing additional avenues for revenue growth by fulfilling emerging market demands, thereby improving customer retention and net retention rates.
Operational efficiencies and improved expense management have led to significant enhancements in subscription ARR contribution margin, which can lead to improved profitability and expectations of higher free cash flow, supporting future earnings growth.

Rubrik Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Rubrik's revenue will grow by 26.2% annually over the next 3 years.
Analysts are not forecasting that Rubrik will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Rubrik's profit margin will increase from -53.7% to the average US Software industry of 13.1% in 3 years.
If Rubrik's profit margin were to converge on the industry average, you could expect earnings to reach $257.3 million (and earnings per share of $1.1) by about September 2028, up from $-524.8 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 130.2x on those 2028 earnings, up from -32.3x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 6.52% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.46%, as per the Simply Wall St company report.

Rubrik Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's reliance on predicting forward-looking statements and market trends could lead to unforeseen material differences, which may affect revenue and earnings if these predictions do not meet expectations.
The aggressive competition in the cyber resilience market, including legacy providers and new-gen alternatives, could hinder market share growth and affect revenue and profitability.
The AI and cloud transformation strategies are still early-stage, and any delays in product-market fit discovery or adoption could impact long-term revenue growth.
Economic factors such as global tariff impacts and overall macroeconomic conditions may shift customer spending priorities away from Rubrik's offerings, potentially affecting revenue projections.
Potential billing duration compression could lead to cash flow challenges, as a shorter billing term might limit upfront cash collection impacting the net margins and financial flexibility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $112.684 for Rubrik based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $125.0, and the most bearish reporting a price target of just $97.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $257.3 million, and it would be trading on a PE ratio of 130.2x, assuming you use a discount rate of 8.5%.
Given the current share price of $87.72, the analyst price target of $112.68 is 22.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Cyber Resilience And Data Security Will Open New Possibilities