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Investing.com - DA Davidson has reduced its price target on Rapid7 (NASDAQ:RPD) to $16.00 from $19.00 while maintaining an Underperform rating on the cybersecurity firm. The stock, currently trading at $19.82, sits near its 52-week low of $19.21, with InvestingPro data showing a significant 48% decline over the past six months.
The revision follows Rapid7’s second-quarter results, which showed annual recurring revenue (ARR) beating consensus estimates by just $0.1 million, with growth decelerating another percentage point to 3% year-over-year. The $1.27 billion market cap company maintains a healthy gross margin of 70.62%, though it trades at a relatively high P/E ratio of 46.6x.
The company also cut its calendar year 2025 ARR guidance by $15 million at the high end and $7.5 million at the midpoint, now projecting just 1-3% year-over-year growth compared to the previous outlook of 1-5%.
Rapid7 attributed the guidance reduction to a higher concentration of large deals with longer sales cycles, though DA Davidson suggested worsening declines in the vulnerability management business may also be contributing to the slowdown.
The research firm noted that low single-digit ARR growth represents the best-case scenario over the next 12-18 months, with risks of further deceleration remaining, while also highlighting the announced retirement of Rapid7’s Chief Financial Officer.
In other recent news, Rapid7 announced its second-quarter annual recurring revenue results, which aligned with expectations. However, the company adjusted the midpoint of its fiscal year 2025 guidance downward due to extended sales cycles. Jefferies responded by lowering its price target for Rapid7 from $35 to $27, while maintaining a Buy rating on the stock. Meanwhile, JPMorgan reiterated its Neutral rating with a $23 price target, citing ongoing execution concerns and predicting a deceleration in Net New Annual Recurring Revenue for the upcoming quarter.
Rapid7 also launched Incident Command, a new Security Information and Event Management solution built on its Command Platform. This offering aims to enhance threat detection and response capabilities, integrating attack surface management and threat intelligence. Additionally, Rapid7 achieved FedRAMP authorization for its InsightGovCloud Platform, allowing U.S. federal agencies to utilize its cloud-based security services. These developments reflect Rapid7’s efforts to expand its product offerings and secure government contracts.
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