Why Rackspace Hosting (RAX) Stock Is Climbing Today

NEW YORK (TheStreet) -- Shares of Rackspace Hosting Inc. (RAX) are higher by 3.65% to $32.98 at the start of trading on Tuesday, following a Wall Street Journal report saying the activist investor Blue Harbour Group LP has purchased a 6.4% stake in the company.

The investor's stake comes as the cloud-computing company executes a review of its strategic options, the Journal added.

Blue Harbour believes Rackspace has other options besides a sale to pull itself out of a stock slump, and sources told the Journal the firm would support a buyback and other plans.
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Separately, TheStreet Ratings team rates RACKSPACE HOSTING INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate RACKSPACE HOSTING INC (RAX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."

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