RPD
Rapid7, Inc.
$12.17
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 113.8% above fair value
You pay
$12.17
Bear
$5.69
Fair
$5.69
Bull
$6.78
Bear
$5.69
-53.2%
3% stage 1 growth, 11% discount
Fair
$5.69
-53.2%
3% stage 1 growth, 11% discount
Bull
$6.78
-44.3%
4% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
33%
Implied Market Multiple
20.6x
Market is pricing in (growth)
9.4%
vs 3.0% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $8.50 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $5.69 per share.
Warnings
Stock-based employee pay equals 446% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $8.50 (from 37 analysts). Our estimate is 47% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions