The stock has soared and dived more times than a hungry hawk this year, and it has recently come close to recovering its near-$40 high from mid-September, which collapsed after the company announced that it would end its evaluation of possible merger and acquisition transactions. The disappointment among investors pushed the stock down about 15%.
Rackspace guided fourth-quarter revenues to a range of $469 million to $476 million, which includes a negative impact of $5 million related to currency exchange effects. The consensus analysts’ estimates call for EPS of $0.18 on revenues of $476.51 million in the fourth quarter and full-year EPS of $0.68 on revenues of $1.8 billion.
The company also said that it expects adjusted EBITDA margin to range between 33% and 35% in the fourth quarter. In the third quarter, adjusted EBITDA margin came to 34.5%.
Rackspace will repurchase up to $500 million of its own stock over the next two years, beginning with an accelerated repurchase plan of $200 million. The company will fund the buybacks with available cash and its existing line of credit.
The company’s CEO said:
We are poised to capitalize on the massive opportunity ahead in the managed cloud market, where we see increasing demand for our managed services and expertise. And while we made strong progress this year, we’re determined to continually improve our execution and seize our future.
Rackspace also announced that it expanded its Managed Private Cloud Portfolio and joined the Microsoft Cloud OS Network.
Shares traded up about 2.5% after-hours on Monday, at $38.25 in a 52-week range of $26.18 to $49.41. Thomson Reuters had a consensus analyst price target of around $41.40 before the report.
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