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Cowen and Company upbeat on Rackspace regardless of potential buyout

Aug. 11, 2016 3:44 PM ETRackspace Hosting, Inc. (RAX) StockRAXBy: Eric McCaffrey, SA News Editor1 Comment
  • Rumors have been circulating since last week of a Rackspace (RAX +1.1%) takeover. Wells Fargo and Oppenheimer & Co. have even issued technical projections relating to a possible deal.
  • Rackspace reported Q2 results on Monday with news the company was offloading its Cloud Sites business, though did not mention anything regarding a full sale.
  • Today, Cowen and Company restates an Outperform rating on the company and a $38 price target (current price $30.04). Analyst Colby Synesael projects FY 2016 revenue of $2.06B, EBITDA of $717M and EPS of $1.04.
  • He cites improved cost management, slowing core growth, capital-light nature of support business, focus on profitability and strong demand for newer growth offerings in the memo.

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