Rackspace Hosting Inc. (NYSE: RAX) has been an incredible story of growth from remote storage. Now that the share price of Rackspace has come back down to earth, we wanted to take a look at both sides of the coin to see if it was dead money or an opportunity to rekindle growth ahead. Even after shares took a beating from the highs, Rackspace is still worth some $6.2 billion in market cap.

For starters, the Thomson Reuters consensus data shows estimates to $0.93 earnings per share (EPS) for 2013 and $1.28 EPS for 2014. That represents earnings growth of 24% in 2013 and about 37% for 2014. With shares around $45, that generates forward price-to-earnings (P/E) multiples of about 48 for 2013 and 35 for 2014.

One of the issues that brought on today’s pondering is that Zacks Investment Research gave the title “Bear of the Day” to the stock. This is a far from a good recommendation, and the firm said:

The frontiers of technology are full of great new innovations that quickly become commodities. The so-called cloud revolution for data storage and software application usage may soon have its own “commodity moment” for firms competing to win and sustain business. And one company currently experiencing the pain of pricing pressures is Rackspace Hosting.

Zacks then went on to say that its own internal ratings went down to a Strong Sell from just Sell last week after analysts continued to lower earnings estimates.

A problem cited is the continual higher competition leading to price cuts. Microsoft Corp. (NASDAQ: MSFT) slashed prices for its Windows Azure to compete against Amazon.com Inc. (NASDAQ: AMZN) and its Amazon Web Services cloud platform. All of this spells bad news for the likes of Rackspace and its peers.

If you just reviewed the cloud exchange traded fund, the First Trust ISE Cloud Computing Index (NYSEMKT: SKYY), you might not think much was going on since there are many high-flyers in that ETF index. Its shares are up 2.5% today at $20.43, versus a 52-week range of $17.06 to $22.10, but unfortunately that is driven by Netflix rather than driven by true cloud computing players.

Rackspace has seen more caution than it has ambition from Wall St. analysts. Its short interest of 11.338 million shares in the most recent period was the highest level going back to last November. Analysts also still somehow have an upside price target consensus of about $64 despite the caution. Here are some of the key calls in the past six weeks or so:

• Downgraded to Market Perform at Wells Fargo (April 2)
• Initiated as Underperform at CLSA (March 27)
• Downgraded to Sector Perform at Pacific Crest (March 22)
• Started as Sector Perform at FBN (March 20)

The good news is that Rackspace Hosting Inc. (NYSE: RAX) shares are up 1.3% at $45.00 early in Tuesday trading. The bad news is that the 52-week trading range is $40.57 to $81.36, followed by more bad news that it trades with high P/E ratios that may spook investors. If analysts are still trimming expectations, that means that the stock may be trading at even higher earnings multiples by the time reality gets here. That means the price target may be coming down even further in the weeks and months ahead if higher competition and lower growth come into play.

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