Overview
Canaccord Genuity downgraded Rapid7 (NASDAQ:RPD) from Buy to Hold on Wednesday and cut its price target to $10 from $27. The firm’s move followed Rapid7’s subdued guidance for fiscal 2026, which included a projected 2-3% decline in revenue year-over-year, the suspension of annual recurring revenue (ARR) guidance, and forecasts that operating income and free cash flow will be lower than the prior year.
Rapid7’s shares were trading at $7.77 at the time reported, having fallen 72.6% over the past 12 months and trading near their 52-week low, according to InvestingPro data.
Guidance and segment performance
The company’s preliminary outlook for FY26 has been characterized by management as conservative, but it stands well below both Canaccord’s and the broader Street’s expectations. Rapid7’s business mix shows a divergence between product lines: the Detection & Response segment recorded 7% year-over-year growth, while the legacy vulnerability management business continued to exert downward pressure on overall revenue trends.
Management also ceased providing ARR guidance, a move that reduces the visibility many analysts rely on to model subscription-driven cybersecurity businesses. Canaccord highlighted these developments as the primary rationale for the reassessment of the stock.
Analyst commentary and context
Canaccord acknowledged that the quarter included the first guidance issued under new Chief Financial Officer Rafe Brown, describing the guidance as "appropriately transparent and conservative." At the same time, the research firm said it remains challenged to model a clear pathway to a meaningful recovery given what it termed a dynamic security operations market.
Other brokerages reacted by lowering their targets as well. Truist Securities trimmed its target to $8 from $14; Scotiabank moved its target to $9 from $18; JP Morgan cut its target to $11 from $20. Canaccord’s downgrade to Hold and $10 price target was part of this broader re-rating of the stock.
Recent results
Rapid7 reported a fourth-quarter 2025 earnings per share of $0.44, topping the consensus estimate of $0.41. Quarterly revenue also beat expectations at $217.39 million versus the forecasted $215.03 million. Despite these upside beats for the quarter, the company’s full-year guidance for 2026 failed to meet market expectations, which led to the wave of downward adjustments to price targets.
Related company note - Saia
Separately, Saia reported fourth-quarter 2025 earnings per share of $1.77, below Evercore ISI’s forecast of $1.95 and the average Street estimate of $1.90. The trucking firm’s revenue, however, exceeded expectations on stronger volumes and yield, and Evercore ISI responded by raising its price target on Saia to $435 from $367. The Saia note appears in the same set of analyst moves referenced alongside Rapid7’s re-rating.
Takeaway
Rapid7’s better-than-expected Q4 2025 results did not offset the market’s reaction to its cautious FY26 guidance. The combination of halted ARR guidance, expected declines in operating income and free cash flow, and a split performance across product lines has prompted multiple brokerages to lower price targets and, in Canaccord’s case, downgrade the stock. The new CFO’s inaugural guidance was described as transparent and conservative, but analysts say uncertainty in the security operations market complicates forecasting a near-term turnaround.