UPDATE: Jefferies Reiterates Buy, $65 PT on Rackspace Hosting as WMware Joins OpenStack

Jefferies reiterated its Buy rating and $65 price target on Rackspace Hosting

as VMware joins OpenStack project, where the company has significant exposure. Jefferies commented, "We believe VMware's decision to join the OpenStack Foundation will be a positive for Rackspace. According to Gartner the IaaS is set to grow to over $24 billion in 2016 from just $4.2 billion in 2011. Added support of the OpenStack project increases the likelihood that Rackspace will be able to grow market share in this rapidly expanding segment. In our view, the move could turn a potential rival into an ally of sorts, and provide a boost to the nascent open source project." Rackspace Hosting closed at $57.63 on Friday.