Wall Street analysts
Earlier in this series, we discussed the factors that led to Rackspace’s (RAX) eventual sale to Apollo Global Management, a PE firm. In the software space where Rackspace operates, Microsoft (MSFT), Oracle (ORCL), IBM (IBM), and Salesforce.com (CRM) are prominent players. Now let’s take a look at select market-centric views and metrics for Rackspace.
Of the 20 analyst recommendations for Rackspace’s stock, there is only one “sell” recommendation. As we can see in the chart below, more than half of the analyst recommendations on the stock were “hold.” The remainder were “buy” recommendations.
These analyst recommendations are expected to change after Rackspace’s sale announcement, but so far, not enough time has passed since the news released, so these estimates reflect analyst views prior to the announcement.
Rackspace’s price performance
Rackspace’s stock price movement during the past month has been significantly positive. As of August 26, the company’s stock has risen by ~35%. On August 26, the company’s stock rose by ~4.3% in the wake of its sale announcement.
Rackspace’s stock has actually been on the rise since the beginning of August, when rumors about its possible sale to a PR firm starting going around, though if we look at the stock value over the past year, it shows a mere ~6% gain.
Analyst target prices
The Wall Street consensus target price for Rackspace was $28.62 per share as of August 26. The median target price was $26.00, as compared to Rackspace’s closing price of $31.5 on August 26.
Investors looking for application software exposure can consider the SPDR S&P 500 ETF (SPY), which invests ~7% of its holdings in the space. Rackspace makes up 0.02% of SPY.