Pacific Crest analyst Chad Bartley this morning cut his rating on Rackspace (RAX) to Sector Perform from Outperform on a valuation basis.
“Based on our 2011 estimate, RAX trades at an EV/EBITDA multiple of 10.4x,” he writes in a research note. “We had thought RAX�s multiple could expand to roughly 12x, which is closer to its historic high of 13x. However, Equinix�s negative preannouncement, combined with Rackspace-specific concerns relating to competition, and the potential negative effects from shifting to the cloud, cause us to believe a 10x multiple is likely the peak for RAX.”
RAX is down 10 cents, to $24.44.
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