Rackspace (NYSE: RAX) Spikes On Q4 Beat; Benchmark Ups To Buy

Palm Beach, FL 2/14/12 (StreetBeat) – Rackspace (NYSE: RAX) shares are trading sharply higher Tuesday morning following the company’s better-than-expected Q4 financial report after the close on Monday.

As I noted late yesterday, the company reported revenue of $283 million, up 7.1% from Q3 and 32% from a year ago, and ahead of the Street at $281 million. Profits of 18 cents a share topped the Street at 15 cents. Adjusted EBITDA of $102 million was up 16.2% sequentially and 42% year-over-year, and ahead of the Street at $94.5 million.

Benchmark Co. analyst Clayton Moran this morning responded to the report by raising his rating on the stock to Buy from Hold.

“Rackspace reported strong Q4 results while indicating trends should drive similar performance in 2012,” he writes in a research note. “We raise our estimates to reflect sustained high growth and solid margins. We now forecast over 30% y/y EBITDA growth in both 2012 and 2013. Using 18x 2012E EBITDA, which is 14x 2013E, our price target rises from $45 to $60 per share.”

RAX this morning is up $3.79, or 7.7%, to $53.02.

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