In a report released today, Hamza Fodderwala from Morgan Stanley maintained a Hold rating on Rapid7 (RPD – Research Report), with a price target of $38.00.
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Hamza Fodderwala has given his Hold rating due to a combination of factors reflecting both stability and challenges for Rapid7. The company delivered results that were in line with expectations for the fourth quarter, with an annual recurring revenue (ARR) increase of 4.2%. However, the outlook for revenue growth and free cash flow (FCF) for the fiscal year 2025 fell short of consensus, which has led to a reduction in forward estimates.
Despite these challenges, there are promising signs, such as a significant quarter-over-quarter increase in net new ARR and management’s confidence in accelerating ARR growth in the coming years. These positives are tempered by ongoing competitive pressures in the Vulnerability Management segment and a projected decline in FCF for 2025 compared to 2024. Due to these mixed factors, Fodderwala maintains a Hold rating, suggesting that while the stock may be nearing a bottom, more consistent performance is needed before revisiting double-digit growth.
Based on the recent corporate insider activity of 44 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RPD in relation to earlier this year.