BTIG analyst Gray Powell has maintained their neutral stance on RPD stock, giving a Hold rating today.
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Gray Powell’s rating is based on a combination of factors, primarily reflecting Rapid7’s current transitional phase and mixed financial outlook. While the company posted reasonable results for the fourth quarter, the initial guidance for 2025 presents a mixed picture with top-line projections aligning with expectations but profitability falling short. The anticipated revenue growth is slightly below previous estimates, and the operating income and free cash flow forecasts have been adjusted downward due to an incremental $30 million investment in operating expenses aimed at spurring growth in the Detection and Response segment.
Additionally, Powell highlights the competitive pressures within the traditional VM market and the impact of cloud migration, which has led Rapid7 to strategically redirect resources towards its higher-growth segments. Despite the Detection and Response segment’s promising double-digit growth, the overall business is still in a state of transition, leading to a more conservative Hold recommendation. The current valuation does not appear demanding, but given the modest growth expectations, significant upside in stock price is limited until there’s clearer evidence of sustainable growth momentum.
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.