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Why Red Hat Stock Fell 17.5% Last Month

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Stock returns

Red Hat stock (RHT) declined 17.5% in June to close at $134.37. The stock is currently trading at $135.26, which is 54% above its 52-week low of $94.5 and 24% below its 52-week high of $177.70. Red Hat stock has risen over 40% in the last 12 months after rising by an impressive 72% in 2017. Red Hat shares have risen 12.6% in 2018.

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So, why did the stock fall in June?

We can see that Red Hat stock has generated impressive returns since the start of 2017 despite its recent decline. In fiscal Q1 2018, Red Hat reported revenue of $814 million with EPS of $0.72, beating analyst earnings estimates of $0.69 by 4.3%.

However, Red Hat forecasted revenue between $822 million and $830 million in fiscal Q2 2018, which was below the median analyst estimates of $855. Red Hat’s EPS guidance of $0.81 was also 10% below median estimates of $0.89 for Q2 2018.

Does this recent stock decline provide an opportunity for investors? Of the 32 analysts covering Red Hat, 18 recommended a “buy,” 11 recommended a “hold,” and three recommended a “sell.” The stock is trading at a discount of 26% compared to the analyst median price target of $170.00.

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