Myriad Genetics, Inc. (MYGN), Workday Inc (WDAY), Rackspace Hosting, Inc. (RAX): Three Notable Upgrades on Wednesday

On Wednesday, we saw such a call by Wells Fargo analyst Gray Powell, when he upgraded Rackspace Hosting, Inc. (NYSE:RAX) to “Outperform.” Yet, less than three months ago, this same analyst downgraded the stock when it was trading near $50.

Now, at $38 ($36 prior to the upgrade), Powell believes that fears of new cloud infrastructure services (i.e. Windows Azure) on Rackspace Hosting, Inc. (NYSE:RAX)’s hosting ops are a bit unwarranted. Powell said that many companies are electing to use standardized platforms – those from Rackspace Hosting, Inc. (NYSE:RAX) – because they are common and easily accessible.

The reason that I like this call is because when Powell downgraded the stock he too was worried about new platforms, but now after having time to assess the market, he sees that Rackspace Hosting, Inc. (NYSE:RAX) products are still very much in demand. However, the stock has lost a great deal of value over the last few months. Thus, I believe it makes the stock a “buy,” and that Powell will once more call the stock correctly.

Final thoughts

Back in May I wrote an article entitled “The Good, Bad, & Ugly of Analyst Upgrades,” which showed that only certain types of analyst calls should be taken seriously. Powell’s Rackspace Hosting, Inc. (NYSE:RAX) call is the quintessential example of a good call, while calls on Myriad Genetics, Inc. (NASDAQ:MYGN) and Workday Inc (NYSE:WDAY) are a bit more questionable. With that said, I do agree with Powell, and believe that Rackspace is presenting upside. Yet, for the reasons noted, I wouldn’t follow William Blair with their Workday rating.

The article 3 Notable Upgrades on Wednesday originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Rackspace Hosting. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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