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Rapid7 Inc (NASDAQ: NASDAQ:RPD), a cybersecurity firm with $844 million in revenue and a market capitalization of $1.42 billion, saw its stock tumble to $22.08, reflecting broader market headwinds and possibly company-specific concerns. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics. This latest price level represents a significant drop from previous valuations, marking a challenging period for the company's investors. Over the past year, Rapid7's stock has experienced a steep decline, with the 1-year change data showing a -54.73% decrease. Despite the downturn, the company maintains a healthy 70.26% gross margin, and InvestingPro analysis indicates the stock is in oversold territory. This volatility within the tech sector affects cybersecurity firms facing intense competition and evolving market demands. Investors and analysts will be closely monitoring Rapid7's strategic moves to rebound from this low point, with InvestingPro offering 15+ additional insights available in its comprehensive Pro Research Report.
In other recent news, Rapid7 reported its latest quarterly financial results, showing a 4% year-over-year increase in annual recurring revenue (ARR), which fell slightly below consensus estimates. Despite this, the company's revenue, profit, and free cash flow surpassed expectations. Rapid7 has provided guidance for ARR growth in 2025, projecting a 4-6% increase, aligning with previous statements and market expectations. However, the company's outlook for operating margins, earnings per share, and free cash flow fell short of projections due to planned investments of approximately $30 million to enhance Managed Detection and Response capabilities.
In a strategic move, Rapid7 entered into a cooperation agreement with activist investor JANA Partners, expanding its Board of Directors from eight to eleven members. This agreement includes mutual support for board nominees and a cap on JANA's ownership at 14.9%. Analysts at DA Davidson adjusted Rapid7's price target to $29, down from $35, maintaining a Neutral rating, while Stephens set a $33 target with an Equal Weight rating. Wolfe Research maintained an Outperform rating with a $31 price target, viewing the board changes positively. These developments reflect ongoing efforts to stabilize and potentially enhance Rapid7's operational and financial performance.
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