Friday, October 15, 2010

Pacific Crest Downgrades Rackspace

By David Gross

Yesterday, Pacific Crest downgraded Rackspace (RAX) on valuation concerns.   The analyst cited an EV/EBITDA ratio of 10.4 on 2011 estimates as being too high for their liking.   Can't say I disagree too strongly.  RAX, while being a very-well run company, is up 40% since I wrote this article about them in July.  

That said, the analyst also popped in something about the Equinix (EQIX) warning from last week, which is ridiculous.  I've never seen a 2% drop in revenue guidance cause so much uproar.   What's next, is Obama going to say something about it?

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