RXT Stock Forecast & Price Target

Rackspace Technology Inc. has demonstrated robust growth in its Private Cloud segment, with bookings increasing by 24% quarter-over-quarter and 42% year-over-year, bolstered by significant contract wins across diverse industries such as healthcare and telecommunications. Although first-half free cash flow (FCF) was adversely affected by one-time vendor prepayments, management anticipates improved FCF in the second half, supported by higher adjusted EBITDA and enhanced working capital performance. Additionally, a positive outlook for FY2026 is indicated by projected revenue growth of 150 basis points and margin expansion of 75 basis points compared to base case assumptions, reinforcing a favorable financial trajectory for the company.

Rackspace Technology Inc. has provided guidance indicating a total revenue decline of approximately 1% year-over-year, which is a slight improvement from an earlier estimate of a 2.4% decline. The company anticipates a more pronounced reduction in its Private Cloud segment, projecting a decline of 3.0% year-over-year, alongside a modest decrease of about 0.3% in the Public Cloud segment. Additionally, assumptions regarding future financial performance suggest a potential reduction in revenue growth by 150 basis points and a decrease in operating margin by 50 basis points in fiscal year 2026, reinforcing concerns about the company's ability to maintain growth and profitability.