RAX Continues To Benefit From Growth Of Managed Hosting

Analysts at Janco Partners initiate coverage of Rackspace Hosting (NYSE: RAX)(FREE stock trend analysis) with a "market perform" rating. The target price for RAX is set to $19.

Rackspace Hosting is focused on managed hosting and cloud computing. The company is benefiting from the robust growth of the managed hosting industry. Janco Partners expects the industry to grow to $22.9 billion in 2012, from $10.8 billion in 2008. RAX has built its cloud computing platform through internal development and acquisitions over the past 24 months.

There is a fair degree of predictability in Rackspace Hosting’s revenue growth, due to its subscription-based recurring revenue model, the analysts say. Even during the challenging economic environment during 2008, the company realized 46% revenue growth and increased headcount by 29.2%.