Red Hat (RHT) Lowered to Hold at Zacks Investment Research

Red Hat (NYSE:RHT) was downgraded by Zacks Investment Research from a “buy” rating to a “hold” rating in a research report issued to clients and investors on Wednesday.

According to Zacks, “Red Hat reported impressive third-quarter fiscal 2018 results. Both earnings per share and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis. Top-line growth benefited from improving linearity driven by on-time renewal of deals (25 in the quarter) reflecting strong demand for hybrid cloud technology solutions as well as aggressive cross-selling. Moreover, robust performance by the Services business based on strong demand for the Ansible solution is a key catalyst. Expected strong demand for containers is another growth driver. Red Hat’s expanding partner base that includes IBM, Intel, Dell, Google, Microsoft, Amazon and Alibaba is noticeable. We note that the company has outperformed the industry on a year-to-date basis. However, stiff competition is a headwind. Pivotal Container Service (PKS) formed through the partnership of Google, Pivotal and VMware is a significant threat in this regard.”

Several other analysts also recently issued reports on RHT. Barclays increased their price target on Red Hat from $105.00 to $120.00 and gave the company an “overweight” rating in a report on Monday, September 18th. Bank of America reiterated a “neutral” rating and issued a $115.00 price target (up from $105.00) on shares of Red Hat in a report on Tuesday, September 26th. Cowen reiterated a “buy” rating and issued a $136.00 price target on shares of Red Hat in a report on Monday, December 11th. Wells Fargo & Co reiterated an “outperform” rating and issued a $124.00 price target (up from $120.00) on shares of Red Hat in a report on Wednesday, September 27th. Finally, Royal Bank of Canada increased their price target on Red Hat to $134.00 and gave the company an “outperform” rating in a report on Thursday, December 14th. One investment analyst has rated the stock with a sell rating, ten have issued a hold rating and twenty-two have given a buy rating to the company’s stock. Red Hat presently has an average rating of “Buy” and a consensus price target of $124.25.

Shares of Red Hat (RHT) traded up $0.94 during trading on Wednesday, hitting $121.04. The company’s stock had a trading volume of 2,360,000 shares, compared to its average volume of 1,780,000. Red Hat has a one year low of $68.95 and a one year high of $130.93. The stock has a market cap of $21,420.00, a price-to-earnings ratio of 65.78, a PEG ratio of 3.67 and a beta of 1.19. The company has a current ratio of 1.37, a quick ratio of 1.30 and a debt-to-equity ratio of 0.53.

Red Hat (NYSE:RHT) last issued its quarterly earnings results on Tuesday, December 19th. The open-source software company reported $0.73 earnings per share for the quarter, topping analysts’ consensus estimates of $0.70 by $0.03. Red Hat had a return on equity of 26.23% and a net margin of 12.14%. The company had revenue of $747.98 million for the quarter, compared to analyst estimates of $734.69 million. During the same quarter in the prior year, the company posted $0.61 EPS. The business’s revenue for the quarter was up 21.6% compared to the same quarter last year. analysts forecast that Red Hat will post 2.08 EPS for the current fiscal year.

In other news, EVP Delisa Alexander sold 1,073 shares of the stock in a transaction dated Tuesday, October 17th. The shares were sold at an average price of $120.36, for a total transaction of $129,146.28. Following the transaction, the executive vice president now owns 38,150 shares of the company’s stock, valued at $4,591,734. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, insider Michael A. Kelly sold 2,888 shares of the stock in a transaction dated Wednesday, October 18th. The stock was sold at an average price of $121.03, for a total transaction of $349,534.64. Following the transaction, the insider now directly owns 8,751 shares in the company, valued at approximately $1,059,133.53. The disclosure for this sale can be found here. Over the last three months, insiders sold 22,172 shares of company stock valued at $2,592,577. 0.66% of the stock is currently owned by corporate insiders.

Hedge funds have recently modified their holdings of the company. Tredje AP fonden bought a new position in shares of Red Hat during the third quarter worth about $345,000. Commonwealth of Pennsylvania Public School Empls Retrmt SYS lifted its position in shares of Red Hat by 9.3% during the third quarter. Commonwealth of Pennsylvania Public School Empls Retrmt SYS now owns 14,432 shares of the open-source software company’s stock worth $1,600,000 after purchasing an additional 1,224 shares during the last quarter. State of Wisconsin Investment Board lifted its position in shares of Red Hat by 22.4% during the third quarter. State of Wisconsin Investment Board now owns 264,085 shares of the open-source software company’s stock worth $29,276,000 after purchasing an additional 48,339 shares during the last quarter. Great West Life Assurance Co. Can lifted its position in shares of Red Hat by 38.6% during the third quarter. Great West Life Assurance Co. Can now owns 174,899 shares of the open-source software company’s stock worth $19,201,000 after purchasing an additional 48,695 shares during the last quarter. Finally, Sumitomo Mitsui Trust Holdings Inc. lifted its position in shares of Red Hat by 9.2% during the third quarter. Sumitomo Mitsui Trust Holdings Inc. now owns 629,475 shares of the open-source software company’s stock worth $69,784,000 after purchasing an additional 53,269 shares during the last quarter. 93.57% of the stock is currently owned by institutional investors and hedge funds.

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Red Hat Company Profile

Red Hat, Inc (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific.

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