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Hold Rating on Rapid7 Amid Mixed Q1 Results and Macroeconomic Challenges

Hold Rating on Rapid7 Amid Mixed Q1 Results and Macroeconomic Challenges

Robert W. Baird analyst Shrenik Kothari has maintained their neutral stance on RPD stock, giving a Hold rating yesterday.

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Shrenik Kothari has given his Hold rating due to a combination of factors influencing Rapid7’s performance. The company reported mixed results for Q1, with revenue and EPS exceeding expectations, but ARR growth fell short, leading to a downward revision in guidance for ARR and total revenue. This was attributed to extended sales cycles and macroeconomic challenges affecting the mid-market segment, which have hindered near-term visibility.
Despite resilience in the Detection & Response segment, the Risk & Exposure Management business faced challenges, particularly in transitioning from VM to Exposure Command. The valuation of Rapid7 is deemed fair at approximately 2.4x EV/CY26E sales, but potential upside is limited in the short term due to macroeconomic and execution risks. Management anticipates gradual stabilization rather than a quick recovery, suggesting that significant reacceleration may not occur until FY26.

In another report released yesterday, Barclays also maintained a Hold rating on the stock with a $26.00 price target.

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