Quantum Corporation (NASDAQ: QMCO) is extending its rally today as investors continue to cheer a new hybrid data protection appliance the company announced last week.
The DXi9200 aims at addressing the rise in cyberattacks with added security and efficiency for data backup and recovery, as per a recent press release.
Quantum stock has more than quadrupled since the announcement on November 20th.
Why does the DXi9200 matter of Quantum stock?
The DXi9200 is available as a capital purchase or a pay-as-you-go subscription.
It will not only enable an organisation to improve its cyber resilience but will also help lower costs and increase IT efficiency, Sanam Mittal – the vice president of Quantum Corporation told investors last week.
Among key features of the DXi9200 is flexible scalability. “The solution features a 110 TB entry capacity that can easily scale in 55 TB increments up to 2.2 PB usable,” the company revealed in its press release on November 20th.
Quantum stock, nonetheless, remain unattractive for income investors as it doesn’t currently pay a dividend yield.
Quantum’s Q2 earnings snapshot
Quantum Corporation broke even in terms of adjusted EBITDA in its latest reported quarter.
That also bodes well for Quantum stock as it suggests the management’s push for operational efficiency is starting to bear fruits.
The Nasdaq-listed firm ended its Q2 with $70.5 million in revenue with a GAAP gross profit margin of 41.5%.
Quantum remains fully committed to product innovation and strategic growth initiatives that it expects will push its top-line up further to as much as $74 million in the current quarter.
The California-based company attributed much of the strength in its recently concluded quarter to significant customer wins that delivered a 28% year-on-year increase in subscriptions driven annual recurring revenue to $19.6 million.
Note that Quantum shares were trading at about $2.50 only in September versus well over $12 at writing.
Are Quantum shares worth owning?
Quantum Corporation lost $13.52 million to end its second financial quarter with just over $16 million in cash and cash equivalents.
So, it evidently relies on positive operating results and will likely have to secure new financing to meet its future obligations.
Still, investors are flocking to Quantum stock because the leadership remains fully confident in its ability to drive future growth.
Plus, the company’s shares could benefit from the growing demand for data management solutions, especially with continued focus on artificial intelligence.
Statista forecasts the AI market to grow at a compound annualised rate of more than 28% over the next five years.
Nonetheless, Quantum shares are not widely covered by Wall Street – and analysts that do cover it rate QMCO at “hold” only.
Their $5 price target warns of a sharp downside from here.
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