UPDATE: D.A. Davidson Upgrades Rackspace Hosting

In a report released Monday, D.A. Davidson analyst Mark Kelleher upgraded Rackspace Hosting RAX from Underperform to Neutral with a 12 to 18 month $33.00 price target.

Analysts at D.A Davidson favor the recent news of Rackspace hiring Morgan Stanley to look for alternatives for the company, influencing a significant rally in the share price. D.A. Davidson announced in a note after that hiring that acquisitions are limited for the company. Rackspace's potential lies in its financial service capability, which Kelleher believes would be negatively factored in the synergies of potential acquisitions.

The 12 to 18 month price target of $33.00 is given by an enterprise value multiple of 6.5x the firms 2015 EBITDA estimate.

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Posted In: Analyst ColorUpgradesAnalyst RatingsD.A. DavidsonMark Kelleher
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