5 Key Things Analysts are Saying About Red Hat (RHT) Following Earnings

After the close, Red Hat (NYSE: RHT) reported Q1 EPS of $0.50, in-line with the analyst estimate of $0.50. Revenue for the quarter came in at $568 million versus the consensus estimate of $562.76 million. EPS guidance was modestly below the Street and revenue guidance was maintained. The company said it sees Q2 2017 EPS of $0.54, versus the consensus of $0.55. Red Hat sees Q2 2017 revenue of $587-593 million, versus the consensus of $588.6 million. Red Hat sees FY2017 EPS of $2.19-$2.23, versus the consensus of $2.24. Red Hat sees FY2017 revenue of $2.38-2.42 billion, versus the consensus of $2.40 billion. The company also announced that its Board of Directors has authorized the repurchase of up to $1 billion of the Company’s common stock.

Below are 5 key things Wall Street analyst are saying about Red Hat following the results:

Mizuho's Abhey Lamba (Buy, $88 PT) - "Red Hat's results came in largely ahead of consensus but expectations had run up going into the print. Revenue beat consensus while EPS was in-line. For billings, the company posted ~20% growth in s-t billings, which we believe is a true reflection of its business momentum."

Jefferies' John DiFucci (Hold, $75 PT) - "... a small acquisition will slightly suppress margins and EPS this year."

Needham & Company's Scott Zeller (Buy, $98 PT) - "Notably, the number of $1m+ deals was +50% y/y in count at 45 deals – yet billings were an in-line $522m (consensus $520m). We believe deferred growth may be "blunted" by larger deals being paid “as you go” rather than prepaid."

Credit Suisse's Siti Panigrahi (Outperform, $95 PT) - "... despite a beat in revenue and the acquisition of 3Scale, management kept FY2017 revenue guidance unchanged at $2.38- 2.42 billion, which in our view appears conservative."

Drexel Hamilton's Brian White (Buy, $105 PT) - "Similar to the sell-off after Red Hat's February quarter results, we believe this morning's weakness represents another buying opportunity in the stock. Next week (June 27-30), Red Hat is hosting the Red Hat Summit in San Francisco that includes its annual Analyst Meeting on June 30."

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