Stephens Initiates Coverage Of Rackspace Hosting (RAX)

Stephens analyst Barry McCarver initiated coverage of Rackspace Hosting, Inc (NYSE: RAX) today with a rating of Equal-Weight and a price target of $22.

McCarver wrote, "while few U.S. companies have yet to guide for significant increases in IT spending in 2010, one piece of the budget that is expected to expand is the outsourcing of data center functions. Growth in this industry illustrates that large enterprises and medium-sized businesses are searching for ways to maintain a technological advantage in computing without long-term commitments and large capital outlays. As we discuss in detail in our initial report, we believe the services that RAX offers, which provide increased flexibility for adopting new technology advancements without long-term commitments, will eventually be the rule instead of the exception when compared to in-house computing."

Rackspace Hosting traded down throughout the day, between $18.40 and $19. The stock's 52 week range is between $4 and $23.51.