Scotiabank has reduced its target price for Rapid7 (NASDAQ:RPD) to $9.00 from $18.00 but kept a Sector Perform rating on the cybersecurity software provider. The revised target lies below Rapid7's most recent trade of $10.39 and substantially under InvestingPro's Fair Value estimate, an indicator that market pricing and analyst models are diverging.
The bank's reassessment follows Rapid7's fourth-quarter disclosures. Scotiabank noted that annual recurring revenue (ARR) and operating margins in the quarter were within acceptable ranges, yet it found the company's guidance for 2026 lacking relative to bullish expectations. That outlook is especially notable given Rapid7's current profitability profile - a diluted EPS of $0.35 over the last twelve months - and consensus analyst forecasts that project EPS of $2.36 for fiscal 2025.
In Scotiabank's view, 2026 represents a "transition year" for Rapid7 driven by a series of operational and strategic changes. The bank expects both revenue and operating income to decline in 2026, and it said that such contractions are likely to exert downward pressure on the stock. Those projections stand in contrast to recent year-over-year revenue growth; Rapid7 reported revenue of $858.67 million with growth of 3.08%.
Market reaction to the company's wider performance has been pronounced. InvestingPro data cited by the bank shows Rapid7's share price has fallen 72.61% over the past 12 months and is trading near its 52-week low, with technical indicators suggesting the stock may be in oversold territory.
Part of Scotiabank's reassessment reflects Rapid7's strategic pivot toward Managed Detection and Response - MDR. The bank described that move as logical, noting that its research indicates many organizations are deprioritizing vulnerability management in their near-term budgets. Scotiabank referenced a conversation with a Chief Information Security Officer who plans to reduce a $700,000 Rapid7 spend by 75% in 2026, an anecdote the bank used to illustrate shifting customer allocation.
While Scotiabank observed that cybersecurity platforms tend to be insulated from AI-driven new entrants because they are mission-critical, the bank stopped short of endorsing Rapid7 as the clear platform of choice for safeguarding enterprises against AI-related threats. The firm expressed skepticism that Rapid7 is optimally positioned to capture that role.
Separately, Rapid7 reported stronger-than-expected results for the fourth quarter of 2025. The company posted earnings per share of $0.44, topping the $0.41 forecast, and revenue of $217.39 million, ahead of estimates of $215.03 million. Despite the quarterly beat, Rapid7's shares slipped modestly as investors digested conservative guidance for 2026.
Full-year guidance issued by Rapid7 also disappointed market expectations and prompted several major financial institutions to revise their views. JPMorgan reduced its target price for Rapid7 to $11 from $20. Canaccord Genuity downgraded its rating from Buy to Hold and cut its price target to $10 from $27. Collectively, those revisions underscore mixed sentiment in the financial community around Rapid7's near-term trajectory.
For investors seeking more granular financial analysis and expanded research, InvestingPro offers detailed Research Reports that cover Rapid7 and more than 1,400 other U.S. equities.
What this means
- Scotiabank's target cut to $9.00 is a significant downside revision from $18.00 and reflects concern about 2026 performance.
- Rapid7 remains profitable on a trailing-twelve-month basis, but forward guidance and strategic transition plans have tempered investor enthusiasm.
- Institutional responses have been mixed, with other major banks and brokers also trimming targets and shifting ratings.
Context and indicators
- Key financials cited include trailing diluted EPS of $0.35, consensus EPS of $2.36 for fiscal 2025, and trailing revenue of $858.67 million with 3.08% growth.
- Q4 2025 results beat expectations with EPS of $0.44 versus $0.41 and revenue of $217.39 million versus $215.03 million.
- Market performance has been weak year-over-year, with a 72.61% decline and trading near a 52-week low according to InvestingPro data.
Note: This article reports on analyst actions, company disclosures and market data as presented in company results and analyst commentary. For further detail, investors may consult the referenced Research Reports for expanded financial and strategic analysis.