Rackspace plunges on weak Q1 guidance, analyst downgrades

Rackspace Technology

23/02/2022 13:22

** Rackspace Technology  RXT.O  shares down 25% to record
low $8.14 premarket after co's qrtly report disappoints
    ** Stock set to extend losing streak to 4 sessions
    ** After the bell Tues, cloud tech firm said expects Q1 rev
of $768-$778 mln and adj EPS of 20-22 cents vs Street view of
$789.5 mln profit of 26 cents/sh, per Refinitiv data
 urn:newsml:reuters.com:*:nGNE5JFZJZ
    ** Q4 results beat top and bottom line estimates, though
gross margins of 31.7% slightly below consensus of 31.9%
    ** BMO downgrades RXT to 'market perform' from 'outperform',
cuts PT to $10.50 from $18
    ** "We are moving to the sidelines until we have more
confidence that margins can stabilize" - BMO
    ** Deutsche Bank cuts rating to 'hold' from 'buy', takes PT
to $9 from $21; at least 4 other brokerages cut their respective
PTs
    ** Now, 6 of 11 analysts rate RXT 'buy' or higher, 5 are
neutral and median PT is $18 - Refinitiv
    ** Shares have fallen 19.5% YTD through close on Tues as
tech and growth names have been punished amid rising interest
rates and inflation

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-332-219-1430))