Red Hat Higher Ahead of Earnings Tomorrow

Sep.25.06 | About: Red Hat, (RHT)

Red Hat (RHAT) shares are higher today, ahead of tomorrow’s expected fiscal second quarter earnings report tomorrow.

Jason Maynard, an analyst at Credit Suisse
, repeated his Outperform rating on the stock this morning, asserting that the shares “represent an excellent buying opportunity” ahead of tomorrow’s report. He says the company has “a 30%-plus, multi-year growth opportunity.” He says in the mid-20s, the stock reflects concerns about integration issues with the company’s JBoss acquisition; deceleration in its core Linux market; and a competitive move by Oracle. “In our opinion, the Q2 results will be solid enough to put to rest some of those near-term concerns and push the stock higher,” he says.

Maynard is expecting results tomorrow to be in line with previous guidance for $96 million to $98 million in revenue, with 15%-16% operating margins. He also thinks the company will maintain its previous fiscal 2007 guidance for revenue of $400 million to $405 million, with operating margins of 19%-20%; and cash flow of $225 million to $235 million.

Red Hat shares today are up 87 cents, to $25.97.