Morningstar Rating

Stock Research and Analysis

by Rick Summer, CFA, CPA

Bulls Say

Rackspace has a customer base of managed hosting customers that are ripe targets for purchasing cloud computing services.
The success of Rackspace's high-touch support organization is validated by its low customer churn rate.
Rackspace is using technology from NASA to lead development of an open-source platform called OpenStack, which is becoming an emerging standard for cloud computing services. Read more 

Bears Say

The market for cloud computing is nascent. The growth prospects for this industry is highly uncertain, heightening the valuation risk for these companies.
Rackspace's business is capital intensive, and small changes in pricing may have larger effects on the company's returns on capital.
Basic cloud computing services will become increasingly price sensitive as the number of alternatives for purchasing server capacity and service become greater. Read more 


Taylor Rhodes was named CEO in late 2014, having previously served in various executive roles at Rackspace since 2007. He was appointed to the top position after the prior CEO resigned in early 2014 and management pursued a potential sale of the company,  Read more 


Rackspace is a managed hosting and cloud computing provider. Cloud computing is the faster-growing market segment and recently reached nearly 30% of overall revenue.The   Read more 

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