What Drove Red Hat's Fiscal 2Q18 Earnings?

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Part 17
What Drove Red Hat's Fiscal 2Q18 Earnings? PART 17 OF 18

What Analysts Recommend for Red Hat Stock

Wall Street analysts on Red Hat stock

Earlier in the series, we discussed Red Hat’s value proposition in the virtualization space. Red Hat’s (RHT) RHEL (Red Hat Enterprise Linux) and RHEV (Red Hat Enterprise Virtualization) for desktops and server virtualization platforms face stiff competition from Microsoft’s (MSFT) Hyper-V, VMware (VMW), and Citrix Systems’ (CTXS) Xen.

Now we’ll look at select market-centric views and metrics of Red Hat, starting with analysts’ views of the company. As the graph below shows, of the 30 analysts covering Red Hat, 70% have given it “buy” recommendations as of September 29, 2017, and 27% have given it “hold” recommendations. There was only one “sell” recommendation on the stock.
What Analysts Recommend for Red Hat Stock

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Red Hat’s price performance

Red Hat’s stock price movement during the past month has been positive with the stock having risen ~3.8% as of September 29. In the past year, Red Hat has returned ~38.5% to its shareholders. Red Hat’s consistent double-digit revenue growth along with diversification in its product lines have contributed to the market’s optimism about its growth prospects.

Earlier, we discussed the rising price targets for Red Hat stock from Deutsche Bank and Mizuho Securities. Wall Street analysts’ consensus target price for Red Hat is $121.14 per share. The stock’s median target price was $122.00 on September 29. Thus, there is ample scope for appreciation in Red Hat stock, which closed at $109.59 on the same day.

Investors looking to gain exposure to the software space can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ), which invests ~27% of its holdings in the application software space.


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