Why Investors Should Take A Look At Rackspace Technology

Rackspace Technology, Inc. RXT has transformed its business by providing multicloud services to hyperscale cloud infrastructure providers. The company has also established a “robust partner ecosystem,” which includes Amazon.com, Inc.'s AMZN AWS, Alphabet Inc.'s GOOGL GOOG Google Cloud, and Microsoft Corporation's MSFT Azure, according to William Blair.

The Rackspace Technology Analyst: Jim Breen initiated coverage of Rackspace Technology with an Outperform rating.

The Rackspace Technology Thesis: The company address a “large and growing market opportunity,” Breen said in the initiation mote.

“The prevalence of a multicloud approach has created integration and operational complexity that require expertise and resources most companies lack. This creates an opportunity for a multicloud services partner to enable businesses to fully realize the benefits of cloud transformation,” he explained.

The analyst quoted IDC estimates for the managed cloud services market, which projects 15% growth per annum to cross $100 billion by 2024.

Breen expects bookings momentum to drive revenue growth over the next few years. “In addition, the capital-light business model and increasing profitability will lead to strong free cash flow growth,” he wrote.

RXT Price Action: Shares of Rackspace Technology had risen by 0.97% to $24.01 at the time of publication Thursday.

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(Photo: Rackspace Technology)