Credit Suisse On Rackspace: 2015 Guidance Intact Despite Q2 'Hiccup'

In a report published Tuesday, analysts at Credit Suisse maintained their Outperform rating on

. The price target was lowered from $57 to $54. The company reported its Q1 revenue slightly below the consensus, with marginally higher than consensus EBITDA. The revenue miss was driven by seasonally weaker sales and higher Fx headwinds. The longer implementation cycles for larger deals also impacted revenues for the quarter. The company maintained its guidance for 2015. Rackspace also guided to below consensus sequential revenue growth for Q2, which the analysts believe was due partly to "a one-time revenue headwind as one large customer had to move their African countries-related environments from Rackspace's UK data center due to data sovereignty issues." "Although Q2 guidance will be an overhang for the stock in near term, we are encouraged by Rackspace's 2015 revenue guidance coupled with the increase in large deal sizes, which reinforces our belief that execution continues to improve with increased penetration into enterprises," the analysts said. Credit Suisse believes that Rackspace is well positioned to benefit from the secular growth trends in the cloud segment.