Red Hat (RHT) Stock | Shakes Off A Red Start


Red Hat Inc (NYSE: RHT)

Shares of RHT initially traded lower by over -1.5% on earnings reported in the afterhours of June 18, 2015.  Since the open of today, Friday June 19th, RHT has recovered the losses from the close of yesterday and currently trading higher by $1.00, or 1.27%.

RHT Earnings

The Raleigh based software company’s first quarter results were $0.44 cents per share on revenue of $481 million compared to the consensus of $0.41 cents per share on revenue of $472.59 million, according to a survey by Thomson Reuters.

RHT profit jumped nearly 27% on robust demand for its cloud technologies.

Analysts on Red Hat, Inc

Sitikantha Panigrahi, a Credit Suisse analyst with an Outperform rating and an $84 price target, noted:

“Red Hat’s Q1 results reinforces our thesis that the continued momentum of RHEL, coupled with growing adoption of open source in enterprises, has enabled Red Hat to increasingly upsell its emerging products. In the long term, we believe that Red Hat is well positioned to benefit from the growing adoption of OpenStack and the cloud computing trend. Therefore, we reiterate our Outperform rating and raise our target price to $84 from $78.”

Kevin Buttigieg, a MKM Partners analyst with a Neutral rating and a $75 price target, noted:

“RHT delivered solid F1Q16 results with revenues and EPS ahead of expectations. Adjusted billings growth of 19% ex-items edged our 17% estimate even though it was hampered by a reduction in average contract duration, a reversal from the past two quarters where duration aided billings. Nevertheless, the shares traded off modestly in after-hours trading as billings missed some Street expectations and guidance was not raised. While neither seems overly concerning fundamentally to us, the investor reaction likely illustrates the high level of expectations currently embedded in RHT shares. So, while RHT continues to outpace all other infrastructure software vendors, that positive performance appears to be well reflected in a 20x EV/cash flow valuation, and we remain concerned that RHT could see billings growth rates decelerate from a decline in average contract duration, the end of the Windows Server 2003 upgrade cycle, and tough compares.”

Business Summary

Red Hat, Inc. provides open source software solutions to enterprise customers worldwide. It develops and offers operating system, virtualization, middleware, storage, and cloud technologies. The company’s products include Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in physical, virtual, container, and cloud environments; Red Hat Enterprise Virtualization, which includes standalone virtualization functionality and management tools for server and desktop deployments; and Red Hat JBoss Middleware that offers middleware for developing, deploying, and managing applications, as well as integrating applications, data and devices, and automating business processes. Yahoo! Finance