Jefferies & Company analyst Katherine Egbert didn’t care much for Red Hat’s quarterly earnings report Wednesday, even though the Linux software-focused firm reported profits that exceeded Wall Street expectations.

In a research note issued early Thursday, Egbert cut her target price for Red Hat (NYSE: RHT) shares to $18 from the $19 she had just set on Wednesday.

Egbert reiterated her “hold” rating on Red Hat, but called the earnings report “A Mixed Hat.”

Street reaction overall to Red Hat’s report was negative. In trading Thursday, shares dropped $1.53 to a 52-week low of $16.37. (The 52-week high is $24.84.)

“Against a backdrop of deteriorating spending, investors are likely to take a half-empty view of tempered revenue,” she noted.

That comment was in response to Red Hat executives’ decision in a conference call with analysts after the earnings report to not update financial guidance for the current fiscal year.

Egbert called the second quarter “respectable” and noted that Red hat revenues and profits were “ahead of both our and consensus (Wall Street) estimates.”

Buoyed by a 29 percent jump in revenues, Red Hat had earlier reported a $21.1 million profit for the quarter ending Aug. 31.

The Linux software developer and solutions provider exceeded Wall Street analysts expectations with a 20-cent per share profit, excluding one-time costs and expenses. Analysts had forecast an 18-cent profit.

Overall, Red Hat revenues hit $164.4 million, up by 29 percent for the same quarter in 2007 and a 5 percent increase from the previous three months.

Red Hat shares closed at $18.01 Wednesday, up 6 cents. The stock moved up slightly even though Egbert issued a report before the markets opened that cut its projected share price to $19 from $20 and warned Red Hat faced “Lots of Headwinds, a Few Tailwinds.”

Egbert expressed concerns about Red Hat’s recent acquisition of Qumranet, a developer of virtualization technology.

“Our focused execution has delivered another quarter of solid growth and financial results,“ said Red Hat Chief Executive Officer Jim Whitehurst in a statement.

“Also in Q2, we continued to execute on our virtualization strategy with our award winning [Red Hat Enterprise Linux] platform as the solid, certified foundation. Our goal is for Red Hat to deliver a comprehensive virtualization solution from server to desktop which will enable our customers to deploy any application, anywhere, anytime.”

Subscription revenue climbed 24 percent from a year earlier to $135.7 million.