Red Hat (RHT): Raising PT After Earnings Beat - Stifel
Stifel analyst, Brad Reback, reiterated his Buy rating on shares of Red Hat (NYSE: RHT) and raised his price target to $125 from $115 after the company posted F2Q18 EPS/revenue of $0.77/$723.4M,
well-above street consensus of $0.77/$699.6M and guidance of $0.67/$695M-$702M.
The company beat the high-end of guidance by $21M, with $16M coming from better-than-expected execution ($12M subscription; $4M services) and $5M due to FX tailwinds. Billings of $682.8M topped consensus at $660.2M and grew 18.7% Y/Y-CC. The analyst estimates short-term billings (uses short-term deferred revenue to help neutralize the impact of varying contract lengths) grew 22.3% Y/Y-CC. Shares were up 4% after-hours.
The analyst stated "Red Hat continues to improve its strategic importance as organizations increasingly adopt a hybrid cloud footprint. While hyperscale cloud vendors such as AWS and Azure will continue dominating the public cloud space, we think Red Hat can continue delivering at least low double digit RHEL growth and 30%+ emerging portfolio growth as customers turn toward Red Hat as they remake their IT architecture".
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Shares of Red Hat closed at $105.76 yesterday.