Ahead Of The Bell: Rackspace Hosting

NEW YORK (AP) — A Stifel Nicolaus analyst reiterated a "Buy" rating on Rackspace Hosting Inc. on Tuesday after the provider of Internet hosting services reported a 67 percent increase in second-quarter profit.

Rackspace also posted a 16 percent jump in quarterly revenue, beating Wall Street's expectations.

Analyst Todd Weller called the quarter's results solid and raised his target price to $18 from $12.

He wrote in a client note there was a "noticeable shift by management to more balanced approach with respect to driving growth and higher margins, which we view as a positive from a stock perspective.

"While we expect (economic) pressures on growth in the near term, we believe Rackspace's long-term growth prospects remain positive," the analyst wrote.

San Antonio-based Rackspace went public about a year ago.