Rackspace (NYSE: RAX) and Terremark (Nasdaq: TMRK) were rewarded with Buy Ratings in a new report that was issued on cloud computing equities. Merriman Curhan Ford is a financial services firm that provides equity research on sectors that it believes represent the potential for high growth. Until its new cloud computing coverage was initiated, it covered only CleanTech, Consumer, Media & Internet, Health Care, Natural Resources and Technology.
The company’s senior vice president and technology equity research analyst, Alex Kurtz, said “We believe Cloud Computing represents a fundamental shift with regards to how IT organizations manage and source data center computing resources.”
Kurz said Rackspace will benefit from being well-positioned to win enterprise contracts for cloud hosting. He wrote, “We believe upside exists in the $24-27 range.” The stock closed at $19.21 today and it has a 52-week range of $4.00 to $23.51.
Terremark is “uniquely positioned” in the data center market to benefit from the move toward cloud hosting and it has a “two year head start on the Federal market that drives 20% of revenues,” Kurtz wrote. The target is $10-12 range, “or 10x-12x EV/CY10 EBITDA.” Terremark closed $834. The 52-week range is $1.85 to $8.98
SAAVIS and NaviSite are also being covered but the initial recommendations were neutral.