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 an impressive 42% year-over-year, reflecting strong demand across diverse industries such as healthcare, BFSI, and telecom. The company expects improved free cash flow in the second half of the year as it overcomes the impact of large one-time vendor prepayments, along with higher adjusted EBITDA and enhanced working capital performance. Additionally, the upside scenario anticipates further revenue growth of 150 basis points and an increase in margin expansion of 75 basis points by FY2026, indicating a strong potential trajectory for the company’s financial health.

Rackspace Technology Inc. is currently facing a negative outlook, primarily driven by a projected total revenue decline of approximately 1% year-over-year, which is a downward revision from a previously estimated decline of 2.4%. The company anticipates a more pronounced decline within its Private Cloud segment at 3% year-over-year, while the Public Cloud segment is expected to decrease by about 0.3%. Additionally, the outlook includes a forecasted reduction of 150 basis points in revenue growth and a 50 basis points decrease in operating margins for the fiscal year 2026 compared to earlier base case expectations.