Analyst advises on buying Amazon's cybersecurity partner. What's the potential?

Mizuho has renewed its recommendation to buy shares of cybersecurity solutions provider Rubrik, whose client is Amazon Web Services, Barron'sreports. The investment bank downgraded the company's securities in May, but since then they have returned to an acceptable price for purchase, analysts believe. They expect Rubrik's quotations to grow by almost 40%.

Analysts at Mizuho upgraded Rubrik's stock rating from Neutral to Outperform, which is equivalent to a recommendation to buy the company's securities. The investment bank also reiterated its target price of $97, which is 39% higher than the closing level of November 17.

Rubrik quotations fell on Monday by 2.6% - to $69.7. Since the beginning of the year, the company's capitalization has grown by 6.6%. For comparison, the S&P 500 index has added about 13% over the same period.

Investment bank notes that despite Rubrik's strong performance, its shares have sagged 16% since Ma 15, the date when Mizuho downgraded it to Neutral. Analysts note that the data received from the company still looks positive, especially due to strong partnerships with players focusing on cyber resilience, Barron's writes. Despite the highly competitive data protection market, the company manages to strike strategic partnership agreements with technology giants such as Amazon Web Services, the publication recalls.

Mizuho upgraded its rating on Rubrik ahead of the cyber threat software developer's third-quarter report to be released on Dec. 4. Analysts at the investment bank expect the company's annualized recurring subscription revenue (ARR) to exceed its own forecasts, rising 32%. The figure rose 36% to $1.25 billion in the second quarter. Mizuho believes Rubrik will also improve its outlook for the current quarter, beating Wall Street's expectations.

Optimism about Rubrik's prospects is not shared by everyone on Wall Street. Oppenheimer analyst Param Singh initiated coverage of the company's stock with a neutral rating on Monday, saying the current valuation is "quite reflective of growth." He acknowledged that researchers at International Data predicted that the amount of data in the world is growing exponentially and it "needs to be preserved for business continuity, which supports the market for backup and recovery software solutions." The increase in hacking incidents and breaches is driving demand for such solutions - an area where Rubrik is working, Barron's explains. However, the company faces significant competition from Commvault and privately held Veeam: "both are rapidly expanding their cybersecurity capabilities and closing the gap," the analyst noted.

Nevertheless, out of 25 analysts tracking Rubrik shares, 23 of them recommend to buy them, and the remaining two - to hold, follows from the data of MarketWatch. Wall Street's consensus forecast implies growth of quotations by 66% from the closing price of trades on November 17 - up to $115.85.

This article was AI-translated and verified by a human editor