What to Expect From Rackspace Earnings
Rackspace Hosting is scheduled to report its second-quarter financial results after the markets close on Monday.
Rackspace Hosting Inc. (NYSE: RAX) is scheduled to report its second-quarter financial results after the markets close on Monday. Consensus estimates from Thomson Reuters call for $0.20 in earnings per share (EPS) on $490.54 million in revenue. In the same period of the previous year, it posted EPS of $0.16 and $441.11 million in revenue.
This leader in managed cloud is also the founder of OpenStack, the open source operating system for the cloud. It offers a diverse portfolio of cloud computing services, including public cloud, dedicated cloud, private cloud and hybrid cloud. All of its services are committed to open technologies. The equipment — including servers, routers, switches, firewalls, load balancers, cabinets, software and wiring — that is required to deliver services is typically purchased and managed by the company.
The stock was absolutely shredded when first-quarter earnings beat analysts’ estimates, while sales narrowly missed projections. The big problem was that Rackspace’s forecast for second-quarter sequential revenue growth of 1.5% to 2.5% was well below analysts’ estimates. The key for investors is that the company still reiterated its full-year guidance, even with the reduced expectations for the current quarter. While sequential growth would have to rise 4% in the third and fourth quarters to reach the bottom of the forecast, if the big deals that got pushed out come in, patient investors may win big.
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A few analysts weighed in on Rackspace ahead of its earnings report:
- RBC Capital has a Sector Perform rating but lowered its price target to $36 from $43.
- Wells Fargo reiterated an Outperform rating.
- Evercore ISI downgraded Rackspace to a Hold rating from Buy and lowered its price target to $40 from $50.
So far in 2015, Rackspace shares have had a very weak performance. The stock is down 31.5% year to date, though shares are up 7% in the past 52-weeks.
Shares of Rackspace were up fractionally at $32.32 Monday morning. The stock has a consensus analyst price target of $49.94 and a 52-week trading range of $28.80 to $56.20.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
