RPD
Rapid7, Inc.
$10.31
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 70.6% above fair value
You pay
$10.31
Bear
$6.04
Fair
$6.04
Bull
$7.01
Bear
$6.04
-41.4%
3% stage 1 growth, 11% discount
Fair
$6.04
-41.4%
3% stage 1 growth, 11% discount
Bull
$7.01
-32.0%
4% stage 1 growth, 11% discount
Adjust Assumptions
3.0%
11.0%
3.0%
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
33%
Implied Market Multiple
16.7x
Market is pricing in (growth)
6.6%
vs 3.0% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (37 analysts)
$11.51
Divergence from AlphaVal
48%
Summary
Using a two-stage FCF DCF with 3% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $6.04 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 $11.51 (from 37 analysts). Our estimate is 48% 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