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Goldman Maintains Neutral On Red Hat (RHT), Waiting On Accelerated Billings Growth

December 21, 2012 7:58 AM EST Send to a Friend
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Price: $56.70 +0.04%

Rating Summary:
    22 Buy, 10 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 35 | Down: 23 | New: 13
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Yesterday Red Hat, Inc. (NYSE: RHT) reported Q3 EPS of $0.29, in-line with the analyst estimate of $0.29. Revenue for the quarter came in at $344 million versus the consensus estimate of $337.57 million.

Analysts at Goldman Sachs compared Red Hat earnings to Oracle (NASDAQ: ORCL), since despite unfavorable macro both showed outperformance on two key metrics, billings and cash flow from operations.

"We continue to see Red Hat as offering a solid product portfolio as the company waits for its emerging secular growth opportunities to start to drive material deal signings," said analyst Heather Bellini.

"As such, we believe the key to Red Hat's organic billings growth potential in the next 12-24 months is more tied to the company’s core products, with optionality as these newer areas start to gain traction. While we expect the stock can continue to move higher near-term, we believe a re-rating of the multiple will be dependent on the ability of the company to get back towards 20% billings growth," added the analyst.

Goldman Sachs has a Neutral rating on Red Hat (NYSE: RHT) with a modified price target of $59.00 (from $58.00).

For an analyst ratings summary and ratings history on Red Hat click here. For more ratings news on Red Hat click here.

Shares of Red Hat closed at $52.61 yesterday.




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