Morgan Stanley Sees Positive Catalysts for Rackspace Hosting

In a report published Tuesday, Morgan Stanley analyst Simon Flannery reiterated an Overweight rating and $45.00 price target on

. In the report, Morgan Stanley noted, “We believe RAX is well positioned as a pure play on managed hosting / cloud computing in the secularly growing IT outsourcing segment. Competitive headwinds are strong, especially in the public cloud segment, but RAX continues to differentiate itself from larger competitors as a service specialist, providing hands-on support to SMB and enterprise customers. Growth slowed in 2013 as RAX focused on migrating to OpenStack. With the focus pivoting back to revenue growth, RAX has implemented a new sales and marketing effort that is starting to show traction. The stock underperformance provides an attractive entry point.” Rackspace Hosting closed on Monday at $27.53.