Red Hat Stands Out To JMP Following Investor Meetings

In a company update report Monday, JMP analyst Greg McDowell continues to hold Red Hat Inc RHT in high regard after investor meetings in Los Angeles. McDowell reiterated a Market Outperform rating along with a $77 price target for the software company.

Highlighting multiple positive aspects from the meetings, McDowell's key takeaways ranged from:

• Confidence in market position; primarily influenced by Windows workloads migrating to Red Hat Enterprise Linux workloads accelerating.
• Deals becoming larger, with 12 deals grossing $5 million and three deals grossing $10 million.
• Cross Selling between other products such as JBoss and OpenStack.
• Believes Red Hat will continue to gain market.

Although the meetings in Los Angeles went well, McDowell still highlights potential risk to Red Hat towards the end of the report. These risks include low barriers to entry in open source market, emerging cloud computing and virtualization technologies, and intense competition.

Despite the risks associated to Red Hat in the software industry, it's difficult to ignore McDowell's praise stating, "We continue to like Red Hat because we believe it will continue to be a "share gainer" against Unix and Windows, and we feel that JBoss and OpenStack can become meaningful contributors to the business over the next few years."

Shares of Red Hat recently traded at $68.50, showing about 10 percent upside compared to McDowell's price target.