Analysts Have Made A Financial Statement On Rackspace Technology, Inc.'s (NASDAQ:RXT) First-Quarter Report
Shareholders in Rackspace Technology, Inc. (NASDAQ:RXT) had a terrible week, as shares crashed 24% to US$18.28 in the week since its latest quarterly results. Revenues were in line with expectations, at US$726m, while statutory losses ballooned to US$0.31 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rackspace Technology after the latest results.
View our latest analysis for Rackspace Technology
Taking into account the latest results, the most recent consensus for Rackspace Technology from nine analysts is for revenues of US$3.03b in 2021 which, if met, would be a meaningful 8.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 75% to US$0.35. Before this earnings announcement, the analysts had been modelling revenues of US$3.02b and losses of US$0.36 per share in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
The average price target held steady at US$26.61, seeming to indicate that business is performing in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Rackspace Technology analyst has a price target of US$28.50 per share, while the most pessimistic values it at US$25.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rackspace Technology's past performance and to peers in the same industry. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 12% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So although Rackspace Technology is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Rackspace Technology analysts - going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - Rackspace Technology has 1 warning sign we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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