12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds

3) Rapid7, Inc. (NASDAQ:RPD)

Forward P/E as of November 20: ~17.8x

Number of Hedge Fund Holders: 31

Rapid7, Inc. (NASDAQ:RPD) is a leading provider of security analytics and automation solutions.

Rapid7, Inc. (NASDAQ:RPD) has been proactive in enhancing its product offerings and refining the go-to-market (GTM) strategy. The launch of the Command Platform represents a significant addition to the company’s security analytics and automation capabilities. Also, Rapid7, Inc. (NASDAQ:RPD) has been successful in upselling to its existing customer base, offering a stable foundation for recurring revenue.

Coming to Rapid7, Inc. (NASDAQ:RPD)’s new Command Platform, it possesses the potential to address complex cybersecurity challenges witnessed by enterprises. The company’s AI-charged Command Platform enables the customers to integrate their critical security data to offer a unified view of vulnerabilities, exposures, and threats from endpoints to the cloud to close security gaps and prevent attacks.

The platform is expected to drive increased adoption among existing customers and onboard new clients seeking integrated security solutions. The Command Platform can allow the company to expand its addressable market. By providing a more comprehensive suite of tools, Rapid7, Inc. (NASDAQ:RPD) can increase its average revenue per customer and improve customer retention rates.

For Q4 2024, Rapid7, Inc. (NASDAQ:RPD) expects revenue in the range of $211 million- $213 million, demonstrating a YoY growth of 3%-4%. It expects non-GAAP net income per share of between $0.48-$0.51. Wasatch Global Investors, an asset management company, released its Q2 2024 investor letter. Here is what the fund said:

“As for our sells, we exited Rapid7, Inc. (NASDAQ:RPD), a cybersecurity company that provides real-time analytic services including vulnerability management and threat protection. We came to the conclusion that cybersecurity services will increasingly be bundled with other services and may no longer offer the competitive advantages and growth potential they once did.”