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On Wednesday, Canaccord Genuity adjusted its price target for Rapid7 (NASDAQ:RPD) to $39 from the previous $43, while reaffirming a Buy rating for the cybersecurity firm’s shares. The revision reflects a modest reduction in the firm’s financial estimates. According to InvestingPro data, the company currently trades at $24.56, with analysts’ targets ranging from $21 to $44. The stock appears undervalued based on InvestingPro’s Fair Value analysis, despite falling nearly 40% over the past six months.
The investment firm’s commentary highlighted Rapid7’s progress in enhancing its sales structure and platform capabilities, which are expected to bolster the company’s growth as economic conditions improve. With revenue of $849 million and a healthy gross profit margin of 71%, the company has demonstrated solid operational performance. Canaccord Genuity sees value in Rapid7’s stock and believes that the company stands as a strong candidate for acquisition, considering the recent speculation surrounding takeovers in the vulnerability management (VM) security sector.
Analysts at Canaccord Genuity have indicated that Rapid7’s comprehensive product suite and competent team, despite exhibiting slightly lower growth and margin profile relative to its competitors, make it a particularly attractive target for potential acquisition. This perspective is further reinforced by an anticipated near-term contraction in margins over the coming year.
The revised price target of $39 is based on approximately 4 times the enterprise value to calendar year 2026 estimated sales and about 22 times the enterprise value to calendar year 2026 estimated free cash flow. This valuation adjustment is a slight decrease from the previous target, which was set at a similar multiple of sales and a slightly higher multiple of free cash flow. Canaccord’s stance maintains a positive outlook on Rapid7’s stock, suggesting that the current valuation is supported even with the reduced price target.
In other recent news, Rapid7 reported first-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $0.43 against the forecasted $0.34. The company also saw a 3% year-over-year revenue increase to $210.25 million, surpassing projections of $208.24 million. Despite these positive results, Rapid7’s guidance for the remainder of the year was less optimistic, projecting modest revenue growth of 1-2% for the second quarter and full-year 2025. The Annual Recurring Revenue (ARR) grew 4% year-over-year to $837 million, with a full-year projection of $850 million to $880 million, indicating 1-5% growth.
Analysts from Stifel, Truist Securities, and Piper Sandler have all revised their price targets for Rapid7, maintaining hold or neutral ratings. Stifel cut its price target to $29, citing macroeconomic challenges impacting the Vulnerability Management sector. Truist Securities adjusted its target to $28, noting deferred deals in the Detection and Response segment and ongoing macroeconomic pressures. Piper Sandler set a new target of $30, highlighting a sequential decline in ARR and the challenges facing Rapid7’s core business.
Despite the mixed outlook, Rapid7 continues to focus on expanding its cybersecurity offerings, including new threat detection and response capabilities. The company has also announced plans to open a global capacity center in India as part of its growth initiatives. These developments reflect Rapid7’s strategic efforts to navigate the current economic landscape while seeking opportunities for future growth.
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