RXT - Rackspace plunges 25% hits 52-week low as analysts downgrade on margins

Rackspace Technologies (NASDAQ:RXT) shares plunged in premarket trading and hit a new 52-week low after the cloud computing company posted fourth-quarter results that topped expectations, but concerns over margins and free cash flow prompted multiple analysts to downgrade the stock. BMO Capital Markets analyst Keith Bachman downgraded the stock to market perform from outperform and lowered the price target to $10.50 from $18, noting that investors are now more focused on margin performance, and as such, the stock should "remain range-bound" as Rackspace could see margin volatility this year. "The BT deal may be accretive to margins longer term given that is private cloud in nature, which are higher-margin services, but this could take several quarters to transition and impact margins for the balance of CY22," Bachman wrote in a note to clients. "Hence, management’s historical commentary that gross margins may continue to decline but op margins should remain stable

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Rackspace plunges 25%, hits 52-week low, as analysts downgrade on margins