Why This Analyst Still Loves Rackspace

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In a report published Friday, JMP Securities analysts maintained a Market Outperform rating on

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Rackspace Hosting, Inc

(NYSE: RAX), with a price target of $67, after having attended part of the keynote session at AWS Summit 2015 and speaking with conference participants and Amazon partners.The analysts quoted the SVP of Amazon Web Services and Keynote Speaker Andy Jassy as saying, "We have thousands of systems integrators (SIs) who have built practices on top of AWS," including various "'born in the cloud' SIs such as Cloudreach, Cloudnexa, and 2nd Watch." This indicates continued robust demand for customer demand for support and services on top of the AWS workloads. In the report JMP Securities noted, "One AWS Premier Consulting Partner (Cloudnexa) told us that his firm charges 18% of a client's total spend on AWS for its services," while adding, "One partner expressed his belief that the key potential inhibitor of Rackspace providing support on top of AWS is the fact that Rackspace competes with AWS, which should make Amazon less open to such a relationship."The non-GAAP EPS estimates for 2015, 2016 and 2017 have been set at $0.95 (consensus at $0.95), $1.24 (consensus at $1.21) and $1.64 (consensus at $1.54), respectively.