RESEARCH TRIANGLE PARK — CBS MarketWatch picked up on an interesting research note about Red Hat last week.
Banc of America downgraded Red Hat (Nasdaq: RHAT) to “neutral” from “buy”, yet the analyst told his clients he still likes the stock.
“While we believe that the move toward Linux-based servers remains only in the early innings and Red Hat is well positioned in this secular trend, we believe any upside to first-quarter results and first-quarter subscription additions is already priced into the shares at current levels,” Susan Lerner of MarketWatch quoted Kirk Materne as saying.
Red Hat announces earnings after the markets close on June 17, and Materne said new enterprise subscriptions will likely exceed his own forecast of 65,175.
RHAT closed Thursday at $25.66.
There’s no doubt that this past year has been an incredible one for Red Hat. It’s stock has jumped from a low of $5.95 to as high as $29.06, the company has beefed up its management team, expanded markets, and is showing strong growth in enterprise sales. CEO Matthew Szulik also has his eyes on the desktop market.
But success also brings higher expectations. For example, Credit Suisse First Boston said last week that it saw “flawless execution” already priced into the stock. The firm rates Red Hat as “neutral”.
Analysts predict Red Hat will report earnings of 4 cents a share on revenues of $43 million, according to Thomson First Call.
Overall, analysts remain bullish on Red Hat with price targets as high as $34 and a “mean” of $28.50. Lowest is $21.
Not everyone is sold on Linux for the enterprise, however. NewsFactor carried an interesting report a few days back about the challenges companies face in making a switch to some variety of Linux. For details, see:
Overdue honor for web’s founder
Tim Berners-Lee, the man generally acknowledged as the brain behind creation of the World Wide Web, will receive a $1.2 million Millennium Technology Prize from the Finish Technology Award Foundation on Tuesday. That’s good news.
Berners-Lee developed the concept while working for CERN, the European Particle Physics Laboratory, in 1989. But he didn’t rush out to patent or copyright the process and thus missed out on the mega-millions other Internet entrepreneurs have made.
In an interview with The International Herald Tribune, Berners-Lee criticized the rush to protect everything today.
“It’s stifling to the academic side of doing research and thinking up new ideas,” he told Victoria Shannon of the IHT, “it’s stifling to the new industry and the new enterprises that come out of that.”