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On Thursday, Rapid7 (NASDAQ:RPD) shares, currently trading at $34.59 with a market capitalization of $2.18 billion, experienced a price target adjustment from DA Davidson, with analyst Rudy Kessinger setting a new target of $35.00, down from the previous $39.00, while maintaining a Neutral rating on the stock. This decision comes in the wake of the company’s latest quarterly financial results. According to InvestingPro data, the stock is trading near its 52-week low of $32.95, though analysis suggests it may be undervalued at current levels.
Rapid7 reported its fourth-quarter earnings, revealing a year-over-year annual recurring revenue (ARR) increase of 4%, which was slightly below consensus estimates. Despite this, the company’s revenue, profit, and free cash flow (FCF) surpassed expectations. InvestingPro data shows the company achieved 8.53% revenue growth in the last twelve months, with a healthy gross profit margin of 70.26%. For deeper insights into Rapid7’s financial health and growth prospects, including 12 additional ProTips and comprehensive valuation metrics, explore the Pro Research Report available on InvestingPro. Looking ahead, Rapid7 provided guidance for the calendar year 2025 ARR growth, projecting a 4-6% year-over-year increase, aligning with prior statements and consensus expectations.
However, the outlook for operating margins (OMs), earnings per share (EPS), and FCF fell short of consensus projections due to anticipated additional investments of roughly $30 million, primarily aimed at enhancing Managed Detection and Response (MDR) capabilities. Kessinger noted that the ARR data indicates a notable decline in the Vulnerability Management (VM) segment, with management citing increased customer churn as a contributing factor.
Despite these challenges, the Detection and Response (D&R) segment of ARR, which exceeds $400 million, is expanding at a mid-teens rate year-over-year and is now the primary focus for Rapid7’s future growth. Management does not expect overall growth acceleration until the calendar year 2026.
In summary, DA Davidson’s analyst reaffirmed a neutral outlook on Rapid7 stock, while reducing the price target to reflect the company’s mixed financial results and the anticipated investments that are expected to impact short-term profitability.
In other recent news, cybersecurity firm Rapid7 has been the focus of several analysts’ adjustments. Mizuho (NYSE:MFG) Securities lowered the price target for Rapid7 from $42 to $39, maintaining a Neutral rating. This adjustment followed Rapid7’s latest quarterly report, which showed a year-over-year increase in Annual Recurring Revenue (ARR) of 4%, meeting Wall Street expectations. However, the company’s full-year revenue, non-GAAP EPS, and Free Cash Flow (FCF) projections fell below analysts’ anticipations.
Citi analysts also revised their outlook on Rapid7, reducing the price target from $46 to $44, while maintaining a Buy rating. This followed Rapid7’s fourth-quarter performance, which showed signs of stabilization and reported double quarter-over-quarter growth in new net ARR to $17 million. However, concerns were raised over Rapid7’s decision to increase research and development investments.
Jefferies also adjusted its outlook on Rapid7, reducing the price target from $50 to $45, but reaffirmed a Buy rating. This followed Rapid7’s fourth-quarter ARR growth of 4.2% year-over-year. However, the 2025 revenue projection fell short of consensus by $17 million, attributed to a shift in focus away from professional services.
These are among the recent developments concerning Rapid7.
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