Investing.com -- William Blair analysts on Thursday initiated research coverage of Rubrik Inc (NYSE:RBRK) stock, assigning a Market Perform rating.

The move comes at a time when the data protection (DP) market is undergoing accelerated growth. According to IDC research, the $13 billion DP market has seen revenue growth increase from low single digits in 2020/2021 to 10% in the first half of 2024, with expectations of continued double-digit growth into 2025.

“The key catalyst (and main tailwind) for this acceleration has been customer recognition that backup serves as the last line of defense against ransomware attacks,” William Blair analysts led by Jason Ader said in a note.

“This has elevated the importance of DP technology and fueled an investment/modernization cycle that we believe is only in the third or fourth inning,” they added.

Rubrik, in particular, has been credited by William Blair for redefining the backup market by promoting the concept of "cyber resilience." The firm's marketing efforts have shifted customer perception from seeing backup as a mundane necessity to an essential cyber resilience platform.

Rubrik's products, which are primarily sold to Chief Information Officers (CIOs), are increasingly being considered by Chief Information Security Officers (CISOs) due to their relevance in cybersecurity.

Despite the growing competition in the DP space, with notable movements like Cohesity's acquisition of Veritas and Veeam's recent financing round, Rubrik is perceived to have strong brand recognition and market momentum.

“The company’s value proposition is built on the operational simplicity and broad, security-centric feature set of its products and its top-notch go-to-market organization,” analysts continued.

Rubrik has also nearly completed its transition to a subscription model, as evidenced by a 43% revenue growth in the most recent quarter. However, the company is still navigating transitional challenges and growth investments, with non-GAAP profitability expected to be achieved in a few years.

While Rubrik's growth prospects appear promising and its competitive position is strong, the stock's valuation is rich, analysts point out.

More specifically, Rubrik's enterprise value to sales multiple stands at 14.6 times for the calendar year 2025 and 11.6 times for 2026, compared to peer group medians of 9.3 times and 8.1 times, respectively.

William Blair also highlighted risks such as intense competition, Rubrik's inexperience in selling to security teams, and the potential for failure in protecting customer data.

Wall Street firms currently have a bullish stance on Rubrik stock, with 16 buy ratings, 3 neutral ratings, and no sell ratings.

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