Red Hat: Little Impact From New Linux Rivals

Another positive note on Red Hat (RHT) today, this time from Jefferies & Co.’s Katherine Egbert, who raised her rating on the stock to Buy from Hold, and increased her price target on the stock to $30 from $21.

Egbert says she expects a strong finish to the company’s February 2007 fiscal year, and she sees a solid fiscal 2008 performance ahead. Egbert says the Oracle (ORCL) and Microsoft (MSFT)/Novell (NOVL) ventures into the Linux business so far seem to be having little impact on sales of Red Hat Enterprise Linux.

Egbert increased her fiscal 2008 estimate on free cash flow per share to $1.20, from $1.14.

Egbert notes that four months into the announcements of the new rivals into the Linux market, they are showing few signs of hurting Red Hat. “We note that Oracle in particular has yet to announcement a significant customer… despite its much lower prices. It seems Microsoft’s relationship with Novell has so far expanded the enterprise Linux market by creating new customers such as Wal-Mart (WMT),” she writes.

Red Hat this morning is up 42 cents at $25.

Earlier: Red Hat: UBS Raises Target; Says Management Holding The Line On Pricing and Discounts