Rackspace Hosting Downgraded To Perform By Oppenheimer

Oppenheimer has published a research report on Rackspace Hosting, Inc. (NYSE: RAX) and has downgraded the company to Perform.

In the report, Oppenheimer writes "We are downgrading RAX to Perform from Outperform, and removing our $28 price target, effective 1/6 at $31.81. We remain positive on secular industry trends, but recent share appreciation has surpassed our price target. Importantly, we expect share gains for managed hosting services and enterprise adoption of cloud solutions to remain powerful long-term secular drivers for RAX. However, with shares up more than 50% over the past four months and currently trading at ~13x '11E EV/EBITDA (substantial premium to closest peers), relative risk/reward appears less attractive. We also believe that high expectations heading into 4Q earnings could limit near-term upside to shares, and would look for a more attractive entry point to become more constructive on the stock."

Rackspace Hosting, Inc. closed Friday at $31.06.