As you might know, Rackspace Technology, Inc. (NASDAQ:RXT) just kicked off its latest third-quarter results with some very strong numbers. Results overall were credible, with revenues arriving 6.1% better than analyst forecasts at US$609m. Higher revenues also resulted in lower statutory losses, which were US$0.21 per share, some 6.1% smaller than the analysts expected. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Rackspace Technology’s three analysts currently expect revenues in 2027 to be US$2.63b, approximately in line with the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.50. Before this earnings announcement, the analysts had been modelling revenues of US$2.62b and losses of US$0.51 per share in 2027.
View our latest analysis for Rackspace Technology
The analysts trimmed their valuations, with the average price target falling 14% to US$4.10, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Rackspace Technology analyst has a price target of US$5.30 per share, while the most pessimistic values it at US$3.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2027 compared to the historical decline of 3.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 14% per year. So while a broad number of companies are forecast to grow, unfortunately Rackspace Technology is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn’t be too quick to come to a conclusion on Rackspace Technology. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Rackspace Technology going out to 2028, and you can see them free on our platform here..
It is also worth noting that we have found 4 warning signs for Rackspace Technology (1 makes us a bit uncomfortable!) that you need to take into consideration.
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