UPDATE: D.A. Davidson & Co. Reiterates on Rackspace Hosting on News of Dell/Red Hat Deal
In a report published Friday, D.A. Davidson & Co. analyst Mark Kelleher reiterated a Neutral rating on Rackspace Hosting (NYSE: RAX), but lowered the price target from $43.00 to $39.00.
In the report, D.A. Davidson & Co. noted, “While we view the maturing of the OpenStack ecosystem as a positive for Rackspace, we also view the enablement of competing private clouds as a threat. Red Hat and Dell are both looking to drive revenue by offering service capabilities to their cloud customers, which is exactly what RAX is attempting to do with its OpenStack-based cloud. We believe Dell (with Red Hat's help) is attempting to challenge the dominance of Amazon Web Services and IBM's cloud efforts (and others), and believe the effort will certainly create more competition for Rackspace. We view the Dell/Red Hat announcement as a negative data point for Rackspace Hosting.”
Rackspace Hosting closed on Thursday at $35.15.
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