Although shares of cloud technology company Rackspace Technology (RXT) have lost momentum over the past month, the company has made some operational progress through strategic collaborations. So, let’s evaluate whether it is worth buying a stock decline. Read on.
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San Antonio, m. based in Texasulti-cloud technology services company Rackspace Technology Inc. (RXT) operates via Multicloud Services and Applications & Cross Platforms. The company accelerates client cloud adoption by providing end-to-end services that include advising, design, migration, administration, and optimization across applications, data, and security.
RXT’s share price has slumped 23.7% over the past three months, closing yesterday’s trading session at $10.26. Additionally, the stock is currently trading 61.1% below its 52-week high of $26.43, reached on April 09, 2021.
However, RXT’s strong core revenue growth, driven by progress across all of its business segments, and recent strategic collaborations, should aid its overall performance in the coming months.
Click here to view our Cloud Computing Industry Report for 2022
Here’s what could shape the performance of the RXT in the near future:
Strategic Partnership
This month, RXT reached the Premier Partnership Tier with Snowflake. Snowflake, a Data Cloud startup, chose Rackspace Technology to help it grow by leveraging the knowledge and capabilities of data services and the potential to accelerate value for clients. This new status places Rackspace Technology in the list of the top 30 partners in the Snowflake partner ecosystem in the United States.
Last month, RXT extended its Strategic Collaboration Agreement (SCA) with Amazon Web Services (AWS) with a multi-year strategic investment to drive customer value and innovation. AWS RXT’s business has increased 250% over the past three years, and the company was selected as the AWS Migration Partner of 2021 (US & Canada). The two companies will also work together to help customers embrace a cloud-based approach by extending Elastic Engineering RXT, a service designed to help customers build and operate modern cloud environments while delivering continuous innovation and transformation, and world-class 24x7x365 operations. .
Also last month, RXT announced an expanded strategic partnership with Cloudflare to provide expert services for Cloudflare Zero Trust, assist businesses in achieving cloud-centric goals more quickly, support remote workers, and provide Secure Access Service Edge (SASE) for their cloud applications. , data, users, and devices. The Rackspace Elastic Engineering for Security RXT portfolio, offered to clients worldwide, includes managed services for Cloudflare Zero Trust.
Discount Value
In terms of forward Non-GAAP P/E, the stock is currently trading at 11x, which is 44.3% lower than the industry average of 19.75x. Also, the 1.81x forward EV/Sales is 46.2% lower than the 3.37x industry average. And the RXT advanced 0.68x Price/Sales are 79.8% lower than the industry average of 3.34x.
Consensus Ratings and Price Targets Show Upgrading Potential
Of the eight Wall Street analysts who rated RXT, five rated it Buy, and three rated it Hold. The 12-month average price target of $14.31 represents a 39.5% increase potential. Price targets range from a low of $9.00 to a high of $19.00.
POWR Rating Reflects Strong Prospect
RXT has an overall B rating, which is equivalent to Buy in our possession POWRA Rating system. The POWR rating is calculated taking into account 118 different factors, with each factor being weighted to an optimal level.
Our ownership rating system also evaluates each stock according to eight different categories. RXT has a B for Value. The company’s lower multiples of the industry are in sync with the values.
Among 55 stocks in C-rated Technology – Communication/Network industry, RXT is ranked #13.
Beyond what I stated above, we have rated RXT for Growth, Quality, Sentiment, Stability and Momentum. Get all RXT ratings here.
The main thing is
While the company’s stock has lost significant momentum over the past few months, the company’s continued efforts to improve its operating performance and revenue growth should help its share price rise in the coming months. In addition, the increasing reliance on cloud services across the business to improve smooth operations will further drive RXT’s performance. Therefore, we think stocks could be a good bet now.
How Rackspace Technology Inc. (RXT) Stack Up Against Colleagues?
RXT has an overall POWR Rating of B, which is equivalent to a Buy rating. Check out these other stocks in the same industry that are rated A (Buy Strong): Extreme Networks Inc. (EXTR), Viavi Solutions Inc. (VIAV), and AudioCodes Ltd. (AUDC).
Click here to view our Cloud Computing Industry Report for 2022
RXT shares were unchanged in Friday’s premarket trading. This year, the RXT has fallen -23.83%, compared to the -8.82% gain in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college he majored in finance and is currently pursuing a CFA program and is a Level II candidate.
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Posts Should You Buy Rackspace Technology at Dip? first appeared in StockNews.com
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