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On Tuesday, Stifel analysts, led by Adam C. Borg, adjusted their outlook on Rapid7 (NASDAQ:RPD) shares, reducing the price target to $29 from the previous $38 while maintaining a Hold rating on the stock. According to InvestingPro data, the stock has shown resilience with an 11% gain over the past week, despite trading significantly below its 52-week high of $44.48. The decision came after Rapid7 reported a mixed first quarter for 2025, with Annual Recurring Revenue (ARR) falling short of expectations due to macroeconomic challenges and vulnerabilities within the Vulnerability Management (VM) sector. However, the company did report first-quarter revenue and profitability that exceeded expectations, maintaining a healthy gross profit margin of 71% and generating significant free cash flow. InvestingPro analysis indicates the stock is currently trading below its Fair Value.
Rapid7’s performance varied across its segments. The Threat Detection and Response division experienced mid-teens growth, which was overshadowed by ongoing weakness in the Risk and Exposure Management segment. In light of a slower-than-anticipated start to the year and prevailing macroeconomic uncertainties, the company’s guidance for second-quarter ARR and revenue is slightly below the consensus, though profitability expectations are modestly higher.
The company’s full-year outlook has also been adjusted. While Rapid7 has lowered its guidance for full-year ARR, revenue, and Free Cash Flow (FCF), it has reaffirmed its operating income guidance. Borg noted that Rapid7 is currently a company undergoing transition and, despite an undemanding multiple, believes that progress will require time to materialize. The analyst expressed a cautious stance on the broader VM market, leading to the lowered target price. For deeper insights into Rapid7’s financial health and growth prospects, including 12 additional ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, Rapid7 reported first-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $0.43, surpassing the forecast of $0.34. Revenue for the quarter rose 3% year-over-year to $210.25 million, beating projections of $208.24 million. However, the company’s guidance for the remainder of the year was less encouraging, forecasting full-year 2025 revenue of $853 million to $863 million, indicating only 1-2% growth. Truist Securities adjusted its price target for Rapid7 to $28, maintaining a Hold rating due to mixed financial results and macroeconomic challenges. Piper Sandler also revised its price target to $30, citing a decline in Annual Recurring Revenue (ARR) and maintaining a Neutral rating. Rapid7’s ARR grew 4% year-over-year to $837 million in the first quarter, with a full-year projection of $850 million to $880 million. Despite these challenges, the company remains committed to operational discipline, forecasting free cash flow of $125 million to $135 million for 2025. Rapid7 also announced the expansion of its cybersecurity offerings and plans to open a global capacity center in India.
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