Rapid7 Surges 6.8%: Is This an Indication of Further Gains?

Rapid7 RPD shares rallied 6.8% in the last trading session to close at $40.55. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 0.7% gain over the past four weeks.

The upswing came after The Wall Street Journal reported that the activist investor, Jana Partners, has built a stake in Rapid7 and is pushing the cybersecurity company to sell itself. Citing sources familiar with the matter, the news agency revealed that apart from urging for a sale, Jana Partners is also pushing Rapid7 to improve operations.

This cybersecurity company is expected to post quarterly earnings of $0.52 per share in its upcoming report, which represents a year-over-year change of +188.9%. Revenues are expected to be $204.06 million, up 7.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Rapid7, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on RPD going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold).

Rapid7 is a member of the Zacks Internet - Software industry. One other stock in the same industry, SurgePays, Inc. SURG, finished the last trading session 3.2% higher at $3.23. SURG has returned -18.3% over the past month.

SurgePays, Inc.'s consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.06. Compared to the company's year-ago EPS, this represents a change of -115%. SurgePays, Inc. currently boasts a Zacks Rank of #4 (Sell).

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