Oppenheimer Signals Buy on 2 Data Storage Stocks â Hereâs Why Theyâre Bullish
Friday, Nov 15, 2024 6:03 am ET
3min read Oppenheimer analyst Param Singh has initiated coverage of Rubrik (RBRK) and Pure Storage (PSTG) with bullish ratings, citing several key drivers for their optimism. The firm sees these data storage stocks benefiting from the rising importance of data, growing data security breaches, and the shift to as-a-service platforms. However, Singh expects Rubrik to remain at an operating loss for the next three years due to heavy investments. Let's delve into the reasons behind Oppenheimer's bullish outlook and the potential risks these stocks face.
Rising importance of data and as-a-service platforms
As data becomes increasingly valuable, the total addressable market (TAM) for backup storage expands, benefiting both Rubrik and Pure Storage. The shift towards as-a-service platforms, such as cloud-based solutions, is another positive factor driving growth in the data storage industry. According to a report by Grand View Research, the global cloud storage market size is expected to reach $163.2 billion by 2026, growing at a CAGR of 22.1% during the forecast period.
Growing data security breaches and ransomware attacks
Growing data security breaches and ransomware attacks are a significant driver behind Oppenheimer's bullish outlook on data storage stocks. As data becomes more valuable, the need for robust backup and security solutions grows. According to a report by Cybersecurity Almanac, the global cost of cybercrime is projected to reach $10.5 trillion by 2025, underscoring the urgency for comprehensive data protection. Rubrik's security-first approach and Pure Storage's teaming up with Rubrik Security Cloud further strengthen their data security offerings, creating a compelling value proposition for investors.
Heavy investments and operating losses
Oppenheimer expects Rubrik to remain at an operating loss for the next three years due to heavy investment. While this may raise concerns for some investors, the firm's positive outlook reflects the long-term growth potential of these data storage stocks. The heavy investments are seen as strategic for future market dominance, outweighing the short-term losses.
Potential risks and challenges
Despite the bullish outlook, these data storage stocks face potential risks and challenges in the near to mid-term. Intense competition in the data storage market, evolving customer needs, and the impact of geopolitical tensions on global supply chains are among the key risks. Additionally, the increasing adoption of cloud-based solutions could potentially cannibalize their on-premises storage business.
In conclusion, Oppenheimer's bullish outlook on Rubrik and Pure Storage is driven by several factors, including the rising importance of data, growing data security breaches, and the shift to as-a-service platforms. However, investors should consider the heavy investment and operating losses when evaluating these data storage stocks. A balanced approach that weighs growth potential against financial performance and valuation is crucial for making informed investment decisions in this high-growth market.
Rising importance of data and as-a-service platforms
As data becomes increasingly valuable, the total addressable market (TAM) for backup storage expands, benefiting both Rubrik and Pure Storage. The shift towards as-a-service platforms, such as cloud-based solutions, is another positive factor driving growth in the data storage industry. According to a report by Grand View Research, the global cloud storage market size is expected to reach $163.2 billion by 2026, growing at a CAGR of 22.1% during the forecast period.
Growing data security breaches and ransomware attacks
Growing data security breaches and ransomware attacks are a significant driver behind Oppenheimer's bullish outlook on data storage stocks. As data becomes more valuable, the need for robust backup and security solutions grows. According to a report by Cybersecurity Almanac, the global cost of cybercrime is projected to reach $10.5 trillion by 2025, underscoring the urgency for comprehensive data protection. Rubrik's security-first approach and Pure Storage's teaming up with Rubrik Security Cloud further strengthen their data security offerings, creating a compelling value proposition for investors.
Heavy investments and operating losses
Oppenheimer expects Rubrik to remain at an operating loss for the next three years due to heavy investment. While this may raise concerns for some investors, the firm's positive outlook reflects the long-term growth potential of these data storage stocks. The heavy investments are seen as strategic for future market dominance, outweighing the short-term losses.
Potential risks and challenges
Despite the bullish outlook, these data storage stocks face potential risks and challenges in the near to mid-term. Intense competition in the data storage market, evolving customer needs, and the impact of geopolitical tensions on global supply chains are among the key risks. Additionally, the increasing adoption of cloud-based solutions could potentially cannibalize their on-premises storage business.
In conclusion, Oppenheimer's bullish outlook on Rubrik and Pure Storage is driven by several factors, including the rising importance of data, growing data security breaches, and the shift to as-a-service platforms. However, investors should consider the heavy investment and operating losses when evaluating these data storage stocks. A balanced approach that weighs growth potential against financial performance and valuation is crucial for making informed investment decisions in this high-growth market.
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