JMP Securities Comments On Meeting With Rackspace Hosting, Highlights Six Findings

In a report published Friday, JMP Securities analyst Patrick Walravens detailed a recent meeting with Rackspace Hosting, Inc.'s RAX Chief Revenue Officer Todd Cione and other members of the management team. Walravens detailed six findings: 1. Business is "good" and demand signals are also "good" – especially from larger organizations. 2. Cione is beginning to see the impact of last year's major sales reorganization in terms of sales results, sales rep participation rates and productivity. 3. The Gartner Magic Quadrant report has resulted in an increased number of RFPs pointed to Rackspace. 4. Rackspace is Microsoft Corporation's MSFT largest hosting partner and there is no agreement today with respect to Azure. 5. The CEOs of both Rackspace and VMware, Inc. VMW are both "very committed to the partnership" and will begin joint account planning, more marketing events and joint branding. 6. Customers have an "appetite" for Rackspace to provide its managed services. The analyst raised his 2015 earnings per share estimate to $0.95 from $0.93 while maintaining a 2016 earnings per share estimate of $1.24 but raising his 2017 earnings per share estimate to $1.64 from a previous $1.55. Shares remain Market Perform rated with a $67 price target.