Hold Rating for Rapid7 Amid Modest Growth and Rising Foreign Expenses

Analyst Shrenik Kothari from Robert W. Baird maintained a Hold rating on Rapid7 (RPD – Research Report) and keeping the price target at $39.00.

Shrenik Kothari has given his Hold rating due to a combination of factors influencing Rapid7’s current financial standing and market performance. The company has shown modest growth in its remaining performance obligations, with a slight increase in both product subscriptions and professional services revenue. However, the growth rate from new customers remains relatively low, indicating a heavy reliance on existing customers for revenue increases.
Additionally, while Rapid7 has expanded its workforce and increased its channel partner contributions, there are concerns regarding its foreign expenses and revenue. The company has incurred higher costs outside the U.S., and the percentage of revenue generated in foreign currencies has also increased. These factors, combined with the rising cost of goods sold due to cloud computing expenses, contribute to a cautious outlook, justifying the Hold rating.