Rackspace Flies on Fourth Quarter Results
Rackspace Hosting Inc’s (NYSE:RAX) stock surged to its highest point ever after the Web hosting company’s fourth-quarter results blew Wall Street predictions out of the water, Reuters reported on Tuesday.
The stock saw an upgrade from at least one brokerage while three others raised their price targets on it. The company’s shares were up 11 percent to $54.80 in early trade on the New York Stock Exchange, and later traded at $54.71, according to the report.
In 2011, Rackspace’s revenue passed the $1 billion mark as more businesses moved their applications to its server “cloud.” The company has seen sustained double-digit revenue growth since it was formed in 1998, said Reuters. On Monday, Rackspace predicted revenue growth in 2012 to match last year’s.
Brokerage Stifel Nicolaus raised its price target on the stock to $66 from $50, saying the recent quarter demonstrates that Rackspace’s revenue growth has several trajectories.
“First, we continue to believe Rackspace is a beneficiary of secular trends related to cloud computing,” said Stifel in a note. “Second, we believe Rackspace is experiencing some cyclical benefits related to improvement in its Small and Medium business customer base.”
RBC Capital Markets, JMP Research and Collins Stewart also raised their price targets on the stock. Benchmark Capital raised the stock to “buy” from “hold.”
Here’s how shares of RAX are reacting to the news:
Rackspace Hosting, Inc (NYSE:RAX): RAX shares recently traded at $55.08, up $5.85, or 11.88%. They have traded in a 52-week range of $30.34 to $50.38. Volume today was 6,168,312 shares versus a 3-month average volume of 1,623,730 shares. The company’s trailing P/E is 117.09, while trailing earnings are $0.47 per share.
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