Double-Digit Growth Expected For Rackspace Hosting

Rackspace Hosting, Inc. RAX will announce its first quarter financial results on Monday, after the bell.

According to Estimize, experts expect to see 11 percent year-over-year growth in earnings, while the crowd anticipates 16.6 percent growth. In the first quarter of 2014, the company had reported earnings of $0.18 per share on revenue of $421 million, substantially above estimates and guidance.

For the first quarter of 2015, the Street models earnings of $0.20 per share on revenue of $481.82 million, while the crowd anticipates earnings of $0.21 per share on revenue of $482.08 million. The company guided revenue of $480.5 million.

As it can be seen at the above chart, the estimates imply a substantial decline from last quarter’s earnings of $0.26 per share – although revenue came in lower at $472.42 million.

The second graph illustrates the evolution of estimates over time. The Street’s expectations have remained pretty much flat over the past few months. The same can be said about the crowd’s consensus.

Related Link: 5 Communications Stocks Pacific Crest Is Buying Before Earnings

Why This Firm Likes Rackspace

In a recent report, analysts at Pacific Crest Securities previewed the Communication Services industry’s first quarter.

Regarding Rackspace, “Our revenue and adjusted EBITDA estimates are in line with consensus and guidance. We believe we are in the early stages of a secular shift from on-premise data centers to hybrid clouds made up of private and public cloud platforms. We believe the company is executing more efficiently and improving its managed service value proposition. In our opinion, our case was reiterated after attending the AWS Summit in San Francisco on April 9. Competition is a primary focus heading into 1Q15. We anticipate an in-line quarter versus consensus estimates.”