Rackspace Technology (NASDAQ:RXT) Stock Jumps 5.7% - Here's Why

Key Points

• Rackspace Technology shares rose 5.7% to about $4.01, near the company’s average analyst price target, although trading volume was far below normal.
• The company’s latest quarterly results beat expectations, with adjusted EPS of a $0.08 loss versus the estimated $0.09 loss and revenue of $670.1 million versus the $646 million consensus.
• Analyst sentiment remains cautious: Rackspace has an average “Reduce” rating, while insiders sold roughly 714,000 shares over the past 90 days; institutional investors own 82.48% of the stock.

Rackspace Technology, Inc. (NASDAQ:RXT - Get Free Report) shares were up 5.7% during trading on Tuesday. The company traded as high as $3.89 and last traded at $4.0050. 630,149 shares changed hands during trading, a decline of 97% from the average daily volume of 19,146,838 shares. The stock had previously closed at $3.79.

Wall Street Analysts Forecast Growth

A number of brokerages have weighed in on RXT. Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Rackspace Technology in a research report on Friday, August 28th. Wall Street Zen downgraded shares of Rackspace Technology from a "hold" rating to a "sell" rating in a research note on Saturday, August 15th. Finally, Royal Bank Of Canada increased their price objective on shares of Rackspace Technology from $2.50 to $4.00 and gave the company a "sector perform" rating in a research report on Wednesday, June 17th. One investment analyst has rated the stock with a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat.com, Rackspace Technology currently has an average rating of "Reduce" and an average price target of $4.00.

Rackspace Technology Price Performance

The stock has a market cap of $1.01 billion, a PE ratio of -6.10 and a beta of 3.05. The company's fifty day moving average is $3.81 and its 200-day moving average is $3.79.

Rackspace Technology (NASDAQ:RXT - Get Free Report) last posted its quarterly earnings results on Monday, August 10th. The company reported ($0.08) EPS for the quarter, beating the consensus estimate of ($0.09) by $0.01. The business had revenue of $670.10 million during the quarter, compared to analysts' expectations of $646.00 million. Analysts expect that Rackspace Technology, Inc. will post -0.28 EPS for the current year.

Insider Buying and Selling

In other Rackspace Technology news, EVP Dharmendra Sinha sold 107,002 shares of the business's stock in a transaction that occurred on Wednesday, September 2nd. The stock was sold at an average price of $2.95, for a total value of $315,655.90. Following the completion of the transaction, the executive vice president directly owned 3,263,429 shares of the company's stock, valued at approximately $9,627,115.55. The trade was a 3.17% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Gajakarnan Kandiah sold 498,728 shares of the company's stock in a transaction that occurred on Friday, September 4th. The stock was sold at an average price of $3.21, for a total value of $1,600,916.88. Following the completion of the sale, the chief executive officer owned 3,684,955 shares in the company, valued at approximately $11,828,705.55. This represents a 11.92% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 714,141 shares of company stock worth $2,299,799 over the last ninety days. 2.30% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. BlackRock Inc. purchased a new stake in shares of Rackspace Technology in the second quarter valued at approximately $51,411,000. Jupiter Topco LLC acquired a new stake in Rackspace Technology in the 2nd quarter valued at $10,462,000. Ieq Capital LLC purchased a new stake in Rackspace Technology in the 2nd quarter worth $4,161,000. Mitsubishi UFJ Asset Management Co. Ltd. acquired a new position in Rackspace Technology during the second quarter worth $3,887,000. Finally, Janus Henderson Group PLC lifted its holdings in Rackspace Technology by 179.7% during the first quarter. Janus Henderson Group PLC now owns 2,937,670 shares of the company's stock valued at $2,878,000 after purchasing an additional 1,887,317 shares in the last quarter. Hedge funds and other institutional investors own 82.48% of the company's stock.

About Rackspace Technology

Rackspace Technology, Inc is a technology services company that helps businesses design, build, operate and optimize information technology environments. Its offerings span public, private and hybrid cloud infrastructure, managed hosting, application services, data services, cybersecurity and professional consulting.

The company supports major cloud platforms, including Amazon Web Services, Microsoft Azure and Google Cloud, and provides services such as cloud migration, modernization, managed operations, application development and infrastructure management.

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