- Oops!Something went wrong.Please try again later.
Last week saw the newest quarterly earnings release from Rapid7, Inc. (NASDAQ:RPD), an important milestone in the company's journey to build a stronger business. The results don't look great, especially considering that statutory losses grew 55% toUS$0.62 per share. Revenues of US$126m did beat expectations by 2.4%, but it looks like a bit of a cold comfort. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Rapid7 from 13 analysts is for revenues of US$522.4m in 2021 which, if met, would be a notable 13% increase on its sales over the past 12 months. Losses are expected to hold steady at around US$2.27. Before this latest report, the consensus had been expecting revenues of US$505.4m and US$1.92 per share in losses. While this year's revenue estimates increased, there was also a considerable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target rose 16% to US$127, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Rapid7 analyst has a price target of US$141 per share, while the most pessimistic values it at US$97.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 28% growth on an annualised basis. That is in line with its 24% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although Rapid7 is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Rapid7. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Rapid7. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Rapid7 analysts - going out to 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for Rapid7 you should be aware of, and 1 of them can't be ignored.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.