On Dec 28, 2013, Zacks Investment Research upgraded
Red Hat Inc. (
to a Zacks Rank #1 (Strong Buy). Long-term expected earnings
growth rate of 19.1%, impressive third-quarter results and a
positive estimate revision trend makes Red Hat an attractive
Why the Upgrade?
Red Hat reported strong third-quarter results, beating the Zacks
Consensus Estimate on both lines. Earnings jumped 44.8% from the
year-ago quarter to 42 cents per share. Revenues increased 15.4%
year over year to $396.5 million and were ahead of management's
guided range of $381.0 million to $384.0 million.
For the fourth quarter of fiscal 2014, Red Hat expects revenues
in the range of $397.0 million to $400.0 million. Management
expects operating margin to be around 24.5%. Non-GAAP earnings
are expected to be in the range of 36 cents to 38 cents per share
for the upcoming quarter.
We believe that strong billings growth (up 19.0% year over year),
solid product pipeline, continuing investments to expand product
portfolio and partnerships will drive growth. Moreover, Red Hat
continues to gain market share. We believe that the company has
significant growth potential in the public cloud segment over the
The Zacks Consensus Estimate for fiscal 2014 increased 5.2% (5
cents) to $1.01 per share as most of the estimates were revised
higher over the last 30 days. For fiscal 2015, the Zacks
Consensus Estimate increased 1.2% (2 cents) to $1.15 per share
over the same time frame.
Other Stocks to Consider:
Other players in the technology industry, which look attractive
at the current levels, include
American Software Inc. (
Interactive Intelligence Group (
MicroStrategy Inc. (
. All these stocks carry the same Zacks Rank as Red Hat.
AMER SOFTWARE A (AMSWA): Get Free Report
INTERACT INTELL (ININ): Free Stock Analysis
MICROSTRATEGY (MSTR): Free Stock Analysis
RED HAT INC (RHT): Free Stock Analysis Report
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