Rackspace Rallies On Goldman Upgrade

Rackspace (RAX) shares are getting a boost today from Goldman Sachs analyst Winston Len, who raised his rating on the Web hosting services provider to Bujy from Neutral. His new price target on the stock is $23, up from $16. Yesterday, the stock closed at $17.57.

Len says a proprietary survey on cloud hosting prices find that “Rackspace is well-positioned to stay ahead of new cloud competition, given its value pricing and reputation for customer service.” He adds that trends among small- and medium-sized customers are “stabilizing,” which he says “sets the company up to see accelerating growth from cloud and enterprise customer growth opportunities.”

Len maintains his 2009 EPS estimate of 24 cents, but ups 2010 to 43 cents from 38 cents, and boosts 2011 to 65 cents, from 56 cents.

RAX today is up 67 cents, or 3.8%, to $18.24.