RXT Stock Forecast & Price Target

Rackspace Technology Inc. has demonstrated significant growth, with Private Cloud bookings increasing by 24% quarter-over-quarter and 42% year-over-year, highlighting strong demand across multiple sectors such as healthcare, BFSI, and telecom. Management anticipates an improvement in free cash flow (FCF) in the second half of the year, driven by higher adjusted EBITDA and enhanced working capital performance following the impact of one-time vendor prepayments in the first half. Additionally, there is potential for further revenue growth and margin expansion projected for FY2026, providing a favorable outlook for the company's financial performance.

Rackspace Technology Inc. faces a challenging financial outlook, with management guiding for a total revenue decline of approximately 1% year-over-year, which is a revision from an earlier estimate of a 2.4% decline. Specifically, the Public Cloud segment is expected to decrease by around 0.3% year-over-year, while the Private Cloud segment is projected to decline by 3.0%. Furthermore, a more conservative case anticipates a reduction of 150 basis points in revenue growth and a 50 basis point decrease in operating margin for FY2026 compared to previous assumptions, indicating persistent pressure on the company's financial performance.