RAX Is Well Positioned For Fundamental Upside

Analyst Gregg Moskowitz of Auriga USA initiates coverage of Rackspace Hosting Inc (NYSE: RAX) with a "buy" rating. The target price for RAX is set to $26.

Rackspace Hosting has transitioned from a small hosting provider to a comprehensive hosting and cloud computing service provider, with the help of acquisitions, according to Auriga USA. The analyst expects RAX to add many more services and revenue streams going forward.

The analyst believes that the contribution from Rackspace Hosting’s existing customers would improve during 2010 and 2011, given the enhancements made to the company’s product portfolio and the economic recovery. The analyst also expects RAX’s margins to expand significantly during 2011.