UPDATE: Benchmark Reduces PT to $63 on Rackspace Hosting on Near-Term Cloud Lull
Benchmark reiterates its Buy rating on Rackspace Hosting (NYSE: RAX) but reduces its price target from $66 to $63.
Benchmark comments, "Rackspace stock is down 29% from its high recently as investors are increasingly concerned about near-term cloud growth. We expect any negative impact of the OpenStack transition to be short-lived and modest. We adjust our estimates to reflect a slightly more conservative scenario. But Rackspace is growing EBITDA 25% to 30% per year and trades at 14x our 2012 estimate. In addition, Rackspace is a possible takeover target."
RAX closed at $42.86 on Friday.
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