Canaccord Genuity Starts Rapid7 (RPD) at Buy

Canaccord Genuity analyst T. Michael Walkley initiates coverage on Rapid7 (NASDAQ: RPD) with a Buy rating and a price target of $60.00.

The analyst commented, "We are initiating coverage of Rapid7 with a BUY rating and $60 price target. Our positive investment thesis is based on the company’s top-three leadership position in Vulnerability Management (VM) combined with the successful platform expansion to adjacent Security Operations segments to address the needs of resource-constrained customers. While the company started with its roots in VM and maintains a leadership position in that competitive but critical segment, Rapid7 has successfully expanded its platform to consolidate key Security Operations functions. With five tightly integrated core Insight modules consolidating multiple areas of IT and security, we believe Rapid7 has strong expansion opportunities within its customer base along with a long runway to drive net customer adds. While the share price is down ~66% YTD vs the S&P 500 down ~24% due to the broader market sell-off and sector rotation toward profitable software companies with solid growth at a reasonable price, we believe the stock is at near-trough levels trading at just 3.1x EV/S on our 2024 estimate. With 30%+ revenue growth reported over the past four quarters, sustained ~20% growth forecast for the next two years, outlook for improving profitability, and management’s expectations to achieve a Rule of 40 by 2025 at $1B in ARR, we believe the share price should move toward our one-year price target as management executes on its plans. With a strong management team and track record of consistent execution, we believe the company is poised to drive share gains. We initiate coverage with a BUY rating and $60 price target, based on the shares trading at roughly 4x EV/S on our C2024 estimate."

For an analyst ratings summary and ratings history on Rapid7 click here. For more ratings news on Rapid7 click here.

Shares of Rapid7 closed at $39.89 yesterday.

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