Ahead Of Red Hat Earnings, This Analyst Is Overweight With A $77 Price Target

Red Hat Inc RHT is scheduled to report its fourth quarter 2015 financial results on March 25, after the market closes. In a report issued Thursday, analysts at Barclays provided a preview, reiterating an Overweight rating and a $77 price target on the stock.

The analysts believe that the software provider will report robust results with healthy underlying momentum, even in spite of the headwinds posed by the strengthening dollar (versus the Euro and Japanese Yen). They also highlight that "growing contribution of Red Hat's public cloud business could potentially contribute to a mixed billings and backlog quarter."

Related Link: Red Hat Stands Out To JMP Following Investor Meetings

Having said this, Barclays believes that Red Hat is well-positioned to benefit from the increasing demand for open source software within large companies.

Moreover, they think that "valuation still largely discounts the option value of the company's emerging products and improving strategic position among enterprises."

For the fourth quarter, Barclays now expects EPS of $0.40, down from a previous estimate of $0.49, and below consensus of $0.41. For the full year, EPS are projected at $1.57, down from $1.87, once again, one cent below consensus.

Finally, for 2016, they are modeling EPS of $1.82, compared to consensus of $1.85. The estimates imply EPS growth of 5 percent for 2015, and 16 percent for 2016.