KeyBanc downgrades Rapid7 as firm tweaks estimates on cybersecurity sector
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Investment firm KeyBanc Capital Markets downgraded Rapid7 (NASDAQ:RPD) on Wednesday as the research outlet also tweaked its estimates on several other cybersecurity firms following recent checks.
Analyst Michael Turits lowered his rating on Rapid7 (RPD) to sector weight even as the company topped third-quarter results thanks to an increase in annual recurring revenue.
"We're positive on [Rapid7's] impressive multi-year shift to cloud and platform expansion beyond [virtual machines] into strategic areas of security, including Cloud Sec, Application Sec and XDR, but have retained caution around their long-term outlook for platform cross-sell, compounded near term by macro," Turits wrote in the note.
Rapid7 (RPD) shares were down nearly 2% in premarket trading on Wednesday.
Recent October checks also resulted in the firm making changes to a number of other companies, but the firm reiterated its overweight rating and $210 price target on Palo Alto Networks (NASDAQ:PANW) going into the company's quarterly results on November 17. 
"We expect strong Palo Alto Networks [first-quarter] revenue, product, Next Gen ARR and billings, but are uncertain about the [second-quarter] guide," Turits explained. The analyst added that there could be "some softness" in the remaining performance obligations and implied bookings and backlog due to the weakening economy.
Nonetheless, Palo Alto (PANW) is still seen as a "high priority spend" for its customers and it is viewed as "the consolidator best positioned in cloud as well as on [premise], with competitive [secure access service edge], cloud security, endpoint and network security offerings."
Turits raised his estimates for the first-half of 2023 billings, but lowered his billings estimates for the second-half of the company's fiscal year, while also trimming estimates for fiscal 2024 and 2025. 
The analyst maintained his overweight rating on Fortinet (NASDAQ:FTNT), but lowered estimates, with the firm becoming "cautious" after its third-quarter results show a miss in backlog and bookings, while also pointing out that Palo Alto Networks (PANW) has "more competitive offerings in both [secure access service edge] and Cloud security."
Turits also lowered estimates on CyberArk (CYBR), Okta (OKTA) but reiterated the firm's overweight ratings on both companies. He also tweaked revenue growth estimates for CheckPoint Software (CHKP) amid recent signs of "slowing bookings" and kept the firm's sector weight rating on the Israeli-based company. 
Earlier this month, Rapid7 (RPD) shares plunged after it cut its annual recurring revenue outlook for fiscal 2022 and Truist downgraded the stock, citing worries over execution.
Analysts are mostly positive on Rapid7 (RPD). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, also rates RPD a HOLD.