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2 Analysts React To Red Hat's Q3 Earnings Print

2 Analysts React To Red Hat's Q3 Earnings Print
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Open source solution provider Red Hat Inc (NYSE: RHT) on Monday reported its third-quarter results, but didn't host a conference call or offer guidance due to the already announced acquisition by IBM (NYSE: IBM).

The Analysts

KeyBanc Capital Markets' Alex Kurtz maintains a Sector Weight rating on Red Hat.

Bernstein's Zane Chrane.

KeyBanc: Key Takeaways

Red Hat's earnings report is highlighted by a slight revenue miss at $847 million versus expectations of $853 million due to unfavorable foreign exchange fluctuations, Kurtz said in a note. On the other hand, EPS of 96 cents beat estimates of 87 cents due to a lower-than-expected tax rate of 16 percent.

Beyond the headline numbers, billings growth re-accelerated from 16 percent last quarter to 24 percent and billings hit $1 billion, which the analyst noted was $94 million better than expected. The company benefited from an increase in large deal activity from 73 last quarter to 100.

Due to the pending acquisition of IBM, the research firm has a neutral stance on the stock.

Bernstein: Billings Surprise

The most surprising readout from Red Hat's earnings print is the $1 billion in billings, which Bernstein modeled to fall short of the consensus estimate. Chrane said the beat in billings likely signals a rebound in demand for the company's solutions, likely driven by its emerging hybrid cloud solutions.

Price Action

Shares of Red Hat were trading marginally higher Tuesday to $176.87 per share.

Related Links:

Red Hat CEO Says Q2 Marks Enterprise Linux 'Bottom'

The Street's Reaction To Big Blue Buying Red Hat

Photo by Bz3rk/Wikimedia. 

Latest Ratings for RHT

Nov 2018KeyBancDowngradesOverweightSector Weight
Oct 2018CitigroupDowngradesBuyNeutral
Oct 2018NomuraDowngradesBuyNeutral

View More Analyst Ratings for RHT
View the Latest Analyst Ratings

Posted-In: Alex Kurtz Bernstein KeyBanc Capital Markets Zane ChraneAnalyst Color Earnings Analyst Ratings Best of Benzinga


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