How Rapid7 Could Rise Even More

In a report published Wednesday, Pacific Crest analyst Rob Owens reiterated an Overweight rating and price target of $28 on

. The company posted strong results for the first quarter as a publicly traded company, beating almost all the estimates. "Given the strength of its product portfolio and underlying business momentum, we believe the company is well positioned to execute on the large opportunity in security analytics," Owens stated. The company reported an impressive 43.6 percent year on year increase in billings, well ahead of the estimates, with higher than estimated revenue, reflecting 41 percent year on year growth, after adjusting for an unanticipated contribution from professional services during the quarter. However, the blended gross margin came in marginally below the estimate, driven by a mix shift to higher professional services revenue. The analyst mentioned that new customer adds and strength in renewals drove growth during the quarter, with the company reported 34 percent year on year growth in the total customer count and more than half of Rapid7's revenue for the quarter coming from new customers. "In its first reported quarter as a public company, Rapid7 displayed strength as its core offerings continued to gain share and its analytics-based value proposition resonated with security buyers. We believe Rapid7 remains well positioned in the market, though it is still early days," Owens added. The analyst believes that the company's "high-visibility subscription model" makes it an attractive investment option in security, while raising the estimates for Rapid7.