RXT Stock Forecast & Price Target

Rackspace Technology Inc. demonstrates strong growth potential, illustrated by a 24% quarter-over-quarter and 42% year-over-year increase in Private Cloud bookings, supported by significant contract wins across diverse sectors such as healthcare, banking, financial services, and telecom. Additionally, management indicated that Free Cash Flow (FCF) in the first half of the year was affected by large one-time vendor prepayments, with expectations for improvement in the second half alongside higher adjusted EBITDA and better working capital performance. Furthermore, the upside case for the company projects an additional 150 basis points of revenue growth and a 75 basis point margin expansion by fiscal year 2026, indicating a promising financial trajectory.

Rackspace Technology Inc. is experiencing a concerning revenue trend, with management guiding a total revenue decline of approximately 1% year-over-year at the midpoint, a reduction from the previous estimate of a 2.4% decline. The company expects a segmented decline in its Public Cloud offerings by roughly 0.3% year-over-year, while the Private Cloud segment anticipates a more significant contraction of about 3.0% year-over-year. Furthermore, projections indicate a potential decline of 150 basis points in revenue growth and a decrease of 50 basis points in operating margin by FY2026, suggesting ongoing challenges that could impact long-term financial stability.