RXT Stock Forecast & Price Target

Rackspace Technology Inc. demonstrated significant growth in its Private Cloud segment, with bookings increasing by 24% quarter-over-quarter and 42% year-over-year, reflecting strong demand across various industries, including healthcare and telecom. Management indicated that first-half free cash flow was influenced by one-time vendor prepayments, suggesting a rebound in the second half, alongside projected improvements in adjusted EBITDA and working capital performance. Furthermore, there is potential for future revenue growth and margin expansion, with an upside case forecasting an additional 150 basis points in revenue growth and 75 basis points in margin improvement by FY2026.

Rackspace Technology Inc. is facing a potential revenue decline, with management estimating an approximate 1% year-over-year decrease, which is an improvement from a prior estimate of a 2.4% decline. The company has also projected a decline in its Public Cloud segment of about 0.3% year-over-year, while its Private Cloud segment is expected to decrease by approximately 3.0% year-over-year. Furthermore, there is an anticipated deterioration in future growth and operating margins, with projections indicating a reduction of 150 basis points in revenue growth and a decrease of 50 basis points in operating margin for FY2026 compared to initial assumptions.