Market Overview

Pacific Crest Upgrades Rackspace Hosting, 'Appears To Have Put Operational Missteps Behind It'

Related RAX
Understanding The Cloud Computing Biz Model: What Are SaaS, PaaS And IaaS?
Apollo's 2016 M&A Frenzy Continues
AT&T's Big Dividend On Sale (Seeking Alpha)

In a report published Wednesday morning, Pacific Crest analyst Michael Bowen upgraded Rackspace Hosting, Inc. (NYSE: RAX) from Sector Perform to Outperform and established a $58 price target.

Bowen's call is based on the improvement of risk vs. reward profile coupled with improved EBITDA margin, despite revenues slightly underwhelming compared to estimate. In defense of his case, Bowen states, "Rackspace appears to have put operational missteps behind it, and has been accelerating the number of larger enterprise wins in recent months. We believe Rackspace will provide more consistent financial performance, including acceleration of sequential revenue growth and adjusted EBITDA margin expansion."

Although there is a glut of market share lost to Amazon, Microsoft, and other OpenStack providers, Bowen believes management has improved operations and supports its 14 percent to 18 percent revenue growth projection.

Shares of Rackspace were recently up 2.1 percent at $50.98.

Latest Ratings for RAX

Aug 2016Raymond JamesDowngradesMarket PerformUnderperform
Aug 2016Wells FargoDowngradesOutperformMarket Perform
Aug 2016JefferiesMaintainsHold

View More Analyst Ratings for RAX
View the Latest Analyst Ratings

Posted-In: Michael Bowen Pacific CrestAnalyst Color Upgrades Analyst Ratings


Related Articles (RAX)

View Comments and Join the Discussion!