Red Hat Struggles Through Transition To Multi-Product Company

Red Hat (RHT) shares are coming under pressure after Credit Suisse analyst Jason Maynard downgraded the stock to Neutral from Outperform, and reduced his price target to $22 from $27.

“The reason for the downgrade is that we believe our thesis of improved field execution and meaningful JBoss acceleration won’t materialize and deliver the anticipated upside to our forecast,” he wrote of the Linux software provider in a research note Monday morning. “Our checks indicate that the organization continues to be in a state of flux as the company struggles through its transition to a multi-product company.”

Maynard says his downgrade is not a call on August quarter results, which he says should be “fairly steady as demand remains largely intact.”

He also notes that “it appears the company is contemplating a broader re-organization,” and that such a move “could cause disruption to the business.”

Maynard also noted that the head of marketing at Red Hat recently left to pursue other opportunities.

RHT 1-yr chart: