RXT Stock Forecast & Price Target

Rackspace Technology Inc. has demonstrated robust growth in its Private Cloud segment, with bookings increasing 24% quarter-over-quarter and 42% year-over-year, reflecting strong demand across various industries such as healthcare, BFSI, and telecom. Management has indicated that first-half free cash flow (FCF) was adversely affected by large one-time vendor prepayments, but expects significant improvements in second-half FCF alongside higher adjusted EBITDA and enhanced working capital performance. Furthermore, management's upside case suggests potential for an additional 150 basis points of revenue growth and 75 basis points of margin expansion for fiscal year 2026, reinforcing a favorable financial outlook for the company.

Rackspace Technology Inc. has indicated a total revenue decline of approximately 1% year-over-year at the midpoint, which is a slight improvement from a previous estimate of a 2.4% decline, highlighting ongoing challenges in growth. The company's Public Cloud segment is expected to experience a decline of about 0.3% year-over-year, while the Private Cloud segment is projected to fall by 3.0% year-over-year, reflecting weaknesses in its cloud offerings. Additionally, management's outlook includes an anticipated reduction of 150 basis points in revenue growth and a 50 basis point decrease in operating margin for FY2026, further emphasizing concerns regarding the company’s financial performance.