SAN FRANCISCO ( TheStreet) – Rackspace Hosting ( RAX) surged on Tuesday following higher-than-expected third-quarter earnings which led analysts to raise the 12-month price target on the San Antonio-based cloud company. British telecom Vodafone Group ( VOD) also gained on an following its earnings report, while Zynga ( ZNGA) jumped an analyst upgrade.
Rackspace Hosting soared 13% to close at $42.25 after posting earnings of 18 cents a share on revenue of $459.8 million, an 18% increase from the same period a year ago year. Here's a closer look at Rackspace earnings, based on a transcript of its earnings call with analysts.
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That performance beat Wall Street's expectations of earnings of 16 cents a share on revenue of $458.4 million, according to analysts surveyed by Thomson Reuters. And in the fourth quarter, the cloud company expects to generate between $469 million to $477 million in revenue, which is higher than analysts expectations of $476.5 million. Rackspace investors like Dan Loeb stand to benefit greatly from the bounce in the stock.
Rackspace's strong earnings come at a time when corporate America is increasingly turning to cloud solutions, where data can be stored in a sea of computers operated by third parties like Rackspace, rather than within the company's own set of computers.
In addition to the upside earnings surprise, Rackspace also received a boost from Credit Suisse, which increased its price target to $45 from $40.