Jefferies initiates coverage on Rapid7 (RPD.US) with a "buy" rating in the risk management segment of cybersecurity
AInvestWednesday, Oct 16, 2024 9:50 am ET
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Investment firm Jefferies published a research note, initiating coverage on individual stocks in the risk exposure management area of the cybersecurity market, and first covered Rapid7 (RPD.US), Tenable (TENB.US) and Qualys (QLYS.US).

Rapid7

Jefferies analyst Joseph Gallo wrote in a research note that he initiated Rapid7 with a "buy" rating and a target price of $50, noting that the company is vying for a share of the $30bn risk exposure management market, which he expects to grow at a compound annual growth rate of 16% by 2028.

Gallo said that Rapid7 has garnered attention in the areas of security information and event management and cloud risk management, both of which are viewed as non-core areas. He added that this is important as the company's core vulnerability management solutions are facing declining demand and macro pressures.

"We see execution benefits from the change in market entry and focus on the channel, while the business trades at a discount to our implied base," Gallo wrote.

Tenable

Gallo rated Tenable "hold" with a target price of $45, and noted that Tenable is the "most mature player" in the risk exposure management area.

"Tenable One is its unified platform, offering a chance to offset cyclical and decelerating core virtual machine revenue through bundling other solutions. However, Tenable is in an early stage outside of core (vulnerability management) (estimated to be 70% of current business), which makes the valuation feel reasonable," Gallo wrote.

Qualys

Gallo rated Qualys "hold" with a target price of $135, and said that growth in adjacent areas may still be "difficult" to materialize before they play a bigger role for the entire company.

"Qualys is focused on investing in S&M, but we expect limited upside, particularly given its second toughest new business (billing) setup in our broader 2025 fiscal year network coverage," Gallo wrote.

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