DA Davidson reduced its target price on Rapid7 (NASDAQ:RPD) to $6.50 from $14.00 on Wednesday, maintaining an Underperform rating on the cybersecurity vendor's stock. The revised target translates to a roughly 15% downside from the prevailing share price of $7.62 at the time the analyst action was reported.
The firm’s decision follows Rapid7’s latest quarterly report, in which annual recurring revenue (ARR) growth slowed to 0% year-over-year in the fourth quarter, down from 2% growth recorded in the prior quarter. The company remained profitable on a trailing twelve-month basis, with diluted earnings per share of $0.36.
DA Davidson analyst Rudy Kessinger highlighted that Rapid7 produced a modest ARR beat in Q4 versus what the firm characterized as "very conservative guidance." However, Kessinger noted the company’s guidance for the first quarter landed "well below" consensus expectations and implies further ARR deceleration to -1% year-over-year.
The brokerage also pointed out that Rapid7 did not provide full-year ARR guidance. Using the company's revenue forecast as presented, DA Davidson interpreted the outlook as implying roughly a 2% year-over-year decline in ARR for the full year, a notable divergence from consensus estimates that had implied 2% growth prior to the earnings release.
Reflecting these results and the forward outlook, DA Davidson said it remains skeptical about a near-term reacceleration in growth, adding: "We continue to believe further growth deceleration is more likely than reacceleration near-term."
Independent analysis from InvestingPro referenced alongside the note indicates the stock may appear undervalued on a Fair Value basis, and shows technical and cash-flow indicators that include an RSI in oversold territory and a free cash flow yield of 25%.
Rapid7’s fiscal 2026 guidance, disclosed by the company, projected a 2-3% revenue decline year-over-year and removed annual recurring revenue guidance entirely. The company also signaled that operating income and free cash flow are expected to decline under the outlook it provided. Those elements of the forecast prompted a number of brokerages to revise their ratings and targets.
Canaccord Genuity downgraded Rapid7 from Buy to Hold and cut its price objective to $10 from $27. Truist Securities trimmed its target to $8 from $14 while keeping a Hold rating. Scotiabank lowered its target to $9 from $18, citing the fourth-quarter performance and a more guarded 2026 outlook. JPMorgan reduced its target to $11 from $20.
Separately, the report included an item on Saia's fourth-quarter 2025 results: Saia reported EPS of $1.77, which was below Evercore ISI’s forecast and the average Street estimate. Despite the miss, Evercore ISI raised Saia’s price target to $435 from $367, attributing the action to a constructive view on margin improvement.
Context and implications
The cluster of analyst revisions underscores investor focus on revenue trajectory and recurring revenue visibility for software and cybersecurity companies. In Rapid7’s case, slowing ARR growth, the removal of annual ARR guidance, and a revenue outlook that implies further contraction have driven multiple firms to pare targets and reassess near-term expectations.