Barclays Keeps Rapid7 Overweight Rating Ahead Of FireEye, CyberArk Earnings

In a new report, Barclays analyst Saket Kalia gives his bullish take on Rapid7 Inc RPD following impressive Q4 earnings. Kalia calls Rapid7’s Q4 a “strong all-around quarter,” which included 53 percent billings growth and 30 percent-plus 2016 revenue growth guidance.

“Revenue growth of 32-37% reflects two years of accelerating billings and their ratable revenue model – we model FY16 billings to grow ~27% though [which] could see upside as underlying market growth, share gains, as well as contribution from smaller businesses like Incident & Response and Advisory services grow,” Kalia explains.

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Kalia notes that profitability remained negative in the quarter, but operating leverage was the reason for a smaller-than-anticipated loss. Barclays believes the company will maintain negative profitability in fiscal 2016, but will generate about $10 million in positive cash flow.

Looking ahead to 2016, the company issued revenue guidance of $146-151 million on EPS of ($0.97)-($0.88), which beat consensus estimates of $139 million and ($0.99), respectively.

Barclays maintains an Overweight rating and $15 price target for Rapid7.

Rapid7’s beat and the fact that Barclays maintains a positive view on the industry, could be good signs for cybersecurity names FireEye Inc FEYE and Cyberark Software Ltd CYBR, which are both set to release earnings on Thursday.

Disclosure: the author holds no position in the stocks mentioned.