Boston-based Rapid7′s stock surged on Wednesday after a report that the cybersecurity firm could be acquired.
The news comes after Rapid7 disappointed investors last year with slowing sales growth. Even with Wednesday’s jump — up 31 percent on the day — Rapid7′s stock price is down 46 percent over the past year.
Reuters reported on Wednesday that Rapid7 had hired investment bank Goldman Sachs after receiving potential acquisition interest. The company declined to comment.
The cybersecurity industry could be ripe for consolidation, according to Alex Henderson, an analyst at Needham & Co.
Rapid7 “as well as other point product companies have been seen as potential take out names by many on the street,” Henderson wrote in a report on Wednesday. “We think there is likely interest from private equity, but do not see a strategic buyer as likely.”
Even with Wednesday’s stock jump “it’s likely there’s upside if a deal occurs, but there also remains risk the price may not be agreed on,” Henderson added.
The depressed stock prices of all kinds of tech companies could lead to an increase in mergers and acquisitions activity. Amazon offered $1.7 billion for iRobot in August and Akamai was the subject of takeover rumors in October. However, Amazon’s deal is still pending regulatory approval and no offer has emerged for Akamai.
Rapid7 was founded in 2000 and went public in 2015. Under chief executive Corey Thomas, Rapid7 itself has been an active acquirer, including paying $335 million for threat intelligence firm IntSights in 2021. In January, Rapid7 hired Twitter whistleblower and security expert Peiter “Mudge” Zatko as an executive in residence.
Aaron Pressman can be reached at email@example.com. Follow him on Twitter @ampressman.