Rapid7 (RPD): Assessing Valuation After a 12% Monthly Slide in Share Price

Rapid7 (RPD) has seen its stock experience a steady slide over the past month, dropping more than 12%. Investors are keeping a close watch as the cybersecurity sector navigates evolving market conditions and shifting demand.

See our latest analysis for Rapid7.

Rapid7’s 1-year total shareholder return stands at -53.9%, reflecting a persistent loss of momentum even before the recent 12% drop in its share price over the past month. With ongoing market pressure, investors are watching to see if the shifting demand in cybersecurity influences performance going forward.

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With shares trading nearly 38% below analyst price targets, the central question is whether Rapid7 is undervalued at current levels or if the market is already accounting for the company’s growth prospects. Is this a genuine buying opportunity, or are investors right to be cautious?

Most Popular Narrative: 27.9% Undervalued

Rapid7's most widely followed fair value estimate stands noticeably above its last close of $17.77. This suggests a significant disconnect between market sentiment and the narrative's outlook for the stock. This sets the stage for a deeper look at the assumptions driving this bold call.

Rapid7's unified Command platform and MDR-led solutions are increasingly winning larger, strategic consolidation deals as enterprises seek to reduce fragmentation and simplify compliance in complex, highly regulated environments. This points to an expanding addressable market, higher average revenue per customer, and sustained revenue growth opportunity.

Read the complete narrative.

Wondering what’s giving Rapid7 its valuation edge? The outlook hinges on a few high-velocity growth levers, with future profit margins and a rare earnings multiple at the heart of this narrative. Want the full, number-crunching logic behind this ambitious price target? The full narrative has the details the market is debating right now.

Result: Fair Value of $24.66 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, extended sales cycles and persistent pressure in legacy products could delay Rapid7's expected growth momentum, which may act as potential stumbling blocks for bullish forecasts.

Find out about the key risks to this Rapid7 narrative.

Another View: Valuation by Earnings Multiple

Looking at Rapid7 through the lens of its price-to-earnings ratio tells a different story. Its current ratio of 41.1x is higher than both the US Software industry average (36.1x) and its fair ratio of 35.2x. This suggests the stock could be overvalued on this basis. Could growth expectations justify this premium, or is caution warranted?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Rapid7 Narrative

If you see things differently or want to uncover your own story in the numbers, you can put together your own perspective in just a few minutes. Do it your way.

A great starting point for your Rapid7 research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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